Owen, Inc. manufactures bookcases and uses an activity-based costing system. Owen€™s activity areas and related data follow:

Owen produced two styles of bookcases in October: the standard bookcase and an unfinished bookcase, which has fewer parts and requires no finishing. The totals for quantities, direct materials costs, and other data follow:

Requirements
1. Compute the manufacturing product cost per unit of each type of bookcase.
2. Suppose that pre-manufacturing activities, such as product design, were assigned to the standard bookcases at $5 each and to the unfinished bookcases at $4 each. Similar analyses were conducted of post-manufacturing activities such as distribution, marketing, and customer service. The post-manufacturing costs were $ 19 per standard bookcase and $ 18 per unfinished bookcase. Compute the full product costs per unit.
3. Which product costs are reported in the external financial statements? Which costs are used for management decision making? Explain the difference.
4. What price should Owen€™s managers set for unfinished bookcases to earn a net profit of $19 per bookcase?

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Predetermined Overhead Allocation Rate 1.00 15.00 3.00 Budgeted Cost of Activity Activity Allocation Base Materials handing Assembly Finishing 210,000 3,000,000 180,000 Number of parts Number of assembling direct labor hours Number of finished units* Total Assembling Direct Labor Hours 14,000 8,880 Total Direct Total Direct Labor Costs Total Units Materials Total Number Product Produced 7,000 7,400 Costs of Parts Standard bookcase $91,000 140,000 28,000 Unfinished bookcase 81,400 88,800 22,200