Styles Styles Par Dhe 40 Question 3 (25 Marks) IFGL Company manufactures and sells three styles of kitchen faucets: Black, Red and White Production takes 25, 25, and 10 machine hours to manufacture 1,000-unit batches of black, red and white facets, respectively. The following additional data apply: Projected sales in units BLACK RED WHITE PER UNIT data: 30,000 50,000 40.000 Selling price S40 $20 $30 Direct materials $8 Direct labor $4 $8 $15 Overhead cost based on direct labor hours $3 $ 9 (traditional system) S12 $3 Hours per 1000-unit batch: $9 Direct labor hours 10 30 Machine hours 25 25 10 Setup hours 1.0 0.5 1.0 Inspection hours 30 20 20 Total overhead costs and activity levels for the year are estimated as follows: Activity Overhead costs Activity levels Direct labor hours 2,900 hours Machine hours 2,400 hours Setups S465,500 95 setup hours Inspections $405,000 2,700 inspection hours S870.500 Required: a. Using the traditional system, determine the operating profit per unit for the black style of faucet. (4 marks) b. Using the ABC system, determine the operating profit per unit for the black style of faucet. (8 marks) c. Explain the difference between the profits obtained from the traditional system and the ABC system. Which system provides a better estimate of profitability? Why? (7 marks) d. What is an operating department and how is it different from a support department? Give examples of each. (6 marks)