To do this: Your tutor will provide you with a case study that includes financial information about an engineering organization which either produces engineering products or provides an engineering service. You should then: Investigate and report on the reasons why engineering organizations want to analyses and control costs, including how decision making can be influenced. Use the case study to research the costs associated with either producing a product or providing an engineering service. You should investigate how costs are allocated to individual activities, including direct costs, indirect costs, variable costs, semi$-$variable costs, fixed costs and general$/$administration costs. You should then use the case study to complete and record an iterative activity$-$based costing exercise to generate an activity$-$based cost model for an engineering product or service. This costing exercise should include five stages: $1)$ identifying activities. $2)$ assigning resource costs to activities. $3)$ identifying outputs. $4)$ assigning activity costs to outputs. $5)$ assigning activity cost pools. Finally, you should reflect on the results of your activity$-$based costing exercise, by: a$)$ explaining how costs are categorized. b$)$ identifying those cost areas that have the greatest impact on the profitability of the product or service that you have investigated.Case study $[2]$: Hand Tools and Storage Products Company $($STANLEY$)$

STANLEY developed two specialized products C and D$.$ For a recent period, the company sold $15,000$ units of C and $3,000$ units of $D.$ Traditional method has been used to allocate in$-$direct costs. The net profit per unit for each type was determined as the following:

Net profit $=$ total revenue $-$ total expenses

Net profit per unit $=$ total revenue per unit $-($direct material cost per unit$+$ direct labor cost per unit $+$ overhead cost per unit$)$

Net profit $(C)=136-(22\mathrm{.}5+12\mathrm{.}5+25)=$$$\frac{76}{?}$ unit

Net profit $(D)=225-(42\mathrm{.}5+17\mathrm{.}5+25)=$$$\frac{140}{?}$ unit

The company is thinking of expanding production both products $($C$)$ and $($D$)$ because they make a huge profit.

Before taking this decision, the company needs you to build an Activity Based Costing model to make sure that they are taking the true decision. The company has $4$ indirect cost pools:

Machines setup activity with $$280,000$ total cost

Purchase orders activity with $$170,000$ total cost

Quality control activity with $$180,000$ total cost

Machines maintenance activity with $$270,000$ total cost.

The company produce two products C$,$ D with the following data:

$\backslash$table$[[$Droduct$,($C$),($D$)],[$Number of units,$15,000,3,000],[$Total revenue per unit,$$136,$$$225$