Question 4. (15 marks) ABC Sally Ltd manufactures two types of radios: a standard model and a smaller portable model. The standard model sells for $35 and the portable for $24. The production costs calculated on a per-unit basis for each model this year were as follows: Traditional Costing Direct materials Direct labour ($10 per hour) Manufact, overhead ($17.08 per DLH) Total per unit cost Standard Portable $ 9.50 $ 6.00 8.00 5.00 13.66 8.54 $31.16 $19.54 During the year, Cloud Ltd manufactured 50,000 standard radios and 20,000 portable radios. The overhead application rate of $17.08 per direct labour hour was determined by dividing the total expected manufacturing overhead of $854,000 by the total estimated direct labour hours (50,000) for the two models. Under traditional costing, the per unit gross profits for the two models were as follows: Per unit selling price Per unit cost Per unit gross profit Standard $35.00 100% 31.16 89% Portable $24.00 100% 19.54 81% $ 3.84 11% $ 4.46 19% As the gross profit (in both dollars and percentage terms) on the portable model far exceeded that for the standard, company management are planning to emphasise the portable model in subsequent advertising and marketing activities. However, before finalising the advertising and marketing plan the company's management accountant was asked to prepare a product costing analysis using activity-based costing (ABC). The management accountant accumulated the following information about overhead for the current year.