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Question 2: Preparation and Presentation of the Income Statement Dinky Drop Electronics Limited manufactures only two (2) products: a major aerospace part, and a security scanner. The company uses a traditional costing system, and overhead costs are currently allocated using a plant-wide overhead rate based on direct labour hours. External cost consultants have recommended, however, that the company should switch to using activity- based costing to charge overhead to products. The company estimates that during 2018 it (the company) will produce 4,000 acrospace parts/units, and 2,000 scanners. Each aerospace unit requires two (2) direct labour hours to produce whilst the scanners take one-half (30 minutes) to produce. The direct material and direct labour costs included in the two products are as follows: Items Direct Material (per component) Direct Labour Aerospace Unit S30 S16 Seanner S17 S4 The budgeted (estimated) total factory overhead data for 2018 is given as: Items Production Set-U Material Handlin Budgeted Overhead (S $80,000 $70,000 $120.000 $270,000 Estimated Volume Level 20 Set-U 5,000 k 6,000 boxes ging and Shi Total Factory Overhead Based on analysis of the consultants of the three overhead activities, it is estimated the two production activities in 2018 is as follows Overall 20 Set Aerospace Unit Scanners 15 Set-U Activity Production Sct-U Material Handlin Packaging and Shipping 5 Set-U 1,000 k 4,000 boxes 4,000 000 boxes 6,000 boxes Required A. Calculate the cost of both products based on a traditional plant-wide rate using direct labour costs to assign o B. Calculate the activity cost rates for: a. Set-Ups; b. Material Handling C. D. c. Packaging and Shipping. Cost the two products using an activity-based costing system. Comment on differences observed using two methods to calculate cost