QUESTION $1$

Required:

a$)$ Using the traditional system, compute the operating profit per unit for the brass, chrome and white faucets. $($Rounding up all calculations$)(6$ marks$)$

b$)$ Show the activity$-$cost$-$driver rate for setup costs and inspection costs. $(2$ marks$)$

c$)$ Using the ABC system, compute the estimated operating profit per unit for the brass, chrome and white faucets. $(9$ marks$)$

d$)$ Based on your answer in $($a$)$ and $($c$)$ above, interpret the difference between the profits obtained from the traditional system and the ABC system. Which system provides a better estimate of profitability? Why? $(3$ marks$)$

e$)$ Best Makan Company would like to reduce its spending on business operations. Discuss possible activities that this company may implement to reduce the costs. $(5$ marks$)$