Comparison of two costing systems Normal manufacturing support costs of LO 1,3 Mclnnes Company for September 2000 are as follows:

The present cost accounting system allocates support costs to final products based on machine hours. Estimated machine hours for September 2000 are 50,000. After losing several bids recently, Roy Mclnnes, the president, asked the controller to implement an activity-based costing system, because he was told that activity-based costing provides more accurate product cost estimates. The controller collected the following data:

The company recently received a request for a bid to supply 1000 units of its product M5. The following estimates were prepared for the production of 1000 units of M5:

REQUIRED

(a) What is the estimated cost per unit of M5 under the present cost accounting system?

(b) What is the estimated cost per unit of M5 if activity-based costing is used?

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COST POOLS Power Materials handling Setups Quality inspections Total NORMAL COSTS $ 40,000 90,000 80,000 40,000 $250,000