Question (3): A) Distinguish between simple and ABC costing systems, and give an overview of Plastim's ABC costing system. B) Applewood Electronics, a division of Elgin Corporation, manufactures two large-screen television models: the Monarch, which has been produced since 2006 and sells for $900, and the Regal, a newer model introduced in early 2009 that sells for $1,140. Based on the following income statement for the year ended November 30, 2010, senior management at Elgin have decided to concentrate Applewood's marketing resources on the Regal model and to begin to phase out the Monarch model because Regal generates a much bigger operating income per unit. Applewood Electronics Income Statement For the Fiscal Veer Ended November 30. 1110 Monarch Bagel Total Revenues Si 9.8111000 $11,500,000 524350.000 Cost of goods sold 12,540,000 3.192.000 15,732,000 Gross margin 7.260.000 1,368,000 8,628,000 Selling and administrative expense 5,830.\")0 978,000 6,008,000 Operating income W LEM W Units produced and sold 22.000 4.000 Operating income per unit sold $5.00 $97.50 Details for cost of goods sold for Monarch and Regal are as follows: Applewood's controller, Susan Benzo, is advocating the use of activity -based costing and activity-based management and has gathered the following information about the c ompany's manufacturing overhead costs for the year ended November 30, 2010. Monarch Regal Total Per unit Total Per unit Direct materials 8 4,576,000 8208 $235,000 3584 Direct manufacturing labora 396.000 18 168010 42 Machine costs\" 3.188.000 288,000 _7_2 Total direct costs 8 8,140,000 970 $2,192,030 8698 Manufacturing overhead costs' S 4.400.000 3200 3 4111.000 81;!) Total cost of goods sold $12,540,000 8570 $3,192.01} 8798