E25-2 Several years after reengineering its production process, Spokes. Inc., hired a new controller, Lindsay Bays. She developed an ABC system very similar to the one used by Spokes' chief rival, Wheels, Inc., of Exercise 25-1. Part of the reason Bays developed the ABC system was that Spokes' profits had been declining, even though the company had shifted its product mix toward the product that had appeared most profitable under the old system. Before adopting the new ABC system, Spokes had used a direct labor hour single-allocation- base system that was developed 20 years ago. For 20X3, Spokes' budgeted ABC allocation rates are Activity Allocation Base Materials handling Number of parts Machine setup Number of setups Insertion of parts Finishing Number of parts Finishing direct labor hours Cost Allocation Rate $ 1.75 per part 300.00 per setup 4.00 per part 70.00 per hour The number of parts is now a feasible allocation base because Spokes recently purchased bar coding technology. Spokes produces two wheel models: standard and deluxe. Budgeted data for 20X3 are as follows: Standard Deluxe Parts per wheel.. 5.0 7.0 Setups per 1,000 wheels. 3.0 3.0 Finishing direct labor hours per wheel 0.2 1.0 Total direct labor hours per wheel 2.0 3.0 The company's managers expect to produce 1,000 units of each model during the year. Required 1. Compute the total budgeted indirect manufacturing cost for 20X3. 2. Compute the ABC indirect manufacturing cost per unit of each model. 3. Using Spokes' old direct labor hour single-allocation-base system, compute the (single) allocation rate based on direct labor hours. Use this rate to determine the indirect manu- facturing cost per wheel for each model under the old single-allocation-base method.