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b) Using ABC, determine the ranking of profitability among the three product lines for year 2019 for Division A. (i.e., specify the highest, the middle, and the lowest profitable product line.) (Chapter 11, 6 marks) c) The COVID-19 pandemic has hit Division A's business significantly. Specifically, Division A expects that, in year 2020, there will be no freezing activity because Division A wants to sell the products as fresh as possible. Division A wants to manufacture the products at a smaller batch each time so there is a 100% increase of set up activities for every product line as below. Pandemic effect on Division A's operation (Year 2020) Activity Tofu Milk Ramen Ordering 25 20 15 Machine set up 180 70 60 Freezing 0 0 0 Packaging 13,500 17,500 8,000 If everything else is equal (activity cost allocation rate, direct manufacturing cost and sales revenue for all three products remain the same), provide the annual change of gross margin under ABC for each product and for Division A (i.e., total gross margin under ABC in 2020 minus total gross margin under ABC in 2019).(Chapter 11, 6 marks)You are an intern working for SAC, a large firm in Melbourne that provides financial and consulting services to clients. Among other regular clients, SAC has provided consulting services for Geunhye-Park Foods (GPF) and New Stone Manufacturing (NSM). Question 1 Division A at Geunhye-Park Foods (GPF) operates at capacity and considers applying ABC analysis to three product lines within its division: tofu, milk, and ramen. Mary Lamb, the manager of Division A, identifies four activities and their activity cost allocation rates as follows: Ordering $102 per purchase order Machine set up $78 per set up Freezing $21 per hour Packaging $0.22 per item sold The revenues, cost of goods sold, and activity usage of the three product lines (year 2019) are as follows: Year 2019 for Division A Tofu Milk Ramen Financial data Revenues $59,000 $66,000 $51,000 Direct manufacturing cost $36,000 $48,000 $34,000 Manufacturing overhead allocated ? ? ? Activity usage (cost-allocation base used) Ordering (purchase orders) 25 20 15 Machine set up (set ups) 90 35 30 Freezing (hours) 190 180 40 Packaging (items sold) 13,500 17,500 8,000 Using a division wide allocation rate, Division A allocated manufacturing overhead to the three products at the rate of 30% of direct manufacturing cost. Profitability is measured by "gross margin: Revenues". Required a) Using a division wide allocation rate, calculate the gross margin of Tofu. (Chapter 11, 3 marks)

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