ABC, product cross-subsidization. Cartwright Ltd. manufactures two models of saddles, J the Jordan and the Shenandoah. The Jordan is a more basic model and sells for $750. The 1.Co st of Jordan, $163.86 Shenandoah is a professional-model saddle and sells for $1,600. At the beginning of the year, per unit the following budgeted data were available:

REQUIRED 1. Calculate the cost per unit for each product assuming the company uses a single overhead allocation rate based en direct labour-hours.
2. Form homogeneous cost pools and select appropriate cost drivers. Explain the rationale behind each of your groupings. Calculate the activity rates.
3. Using the activity rates calculated in requirement 2, calculate the per-unit cost for each product.
4. Compare your results from requirements | and 3, and comment on your results.LO1

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Jordan Shenandoah Expected production (units) Machine time (hours) 15,000 5,000 2,000 2,000 Direct material unit cost $ 100 $ 200 Direct labour-hours 30,000 30,000 Receiving (number of orders processed) 150 650 Setups (number of setups) 15 100 Direct labour average wage rate (per hour) 20 $ 20 Purchasing (number of requisitions) 50 110. Inspection (% of units inspected) 10% 20% Maintenance hours 450 950 Design and production support (hours) 100 400