1. Calculate the profit margin per unit for each product using ABC. DISPLAY all calculations rounded to the nearest cent. Do NOT round the actual background numbers used for the calculations. The ABC cost computation includes two cost categories:

a. Direct Materials cost

b. Conversion costs: all other non-material cost activities

Please provide excel file with formulas.

Estimated Production : Standard Chairs Percent of total Sales Price Special-order Chairs Percent of Total Sales Price 36,000 80% $400 20% $515 Traditional Cost Information Direct Material Costs: Standard - $183/unit Conversion Costs: Direct Labor Manufacturing Overhead: Equipment Depreciation Supplies Supervision Maintenance Quality Control Rework Tax & Insurance Total Manufacturing Overhead Total Conversion Costs Special-order - $225/unit $1,296,000 $103,200 92,244 72,000 17,000 35,000 50,000 285,120 654,564 $1,950,564 Note: For product costing purposes, GC uses direct labor hours as the single cost driver. The standard chair requires 3.5 direct labor hours, and the special-order chair requires 4.0 direct labor hours. The wage rate is $10 per direct labor hour. Production Process Recieving Process Cutting Process Sewing Process Wood Frame Process Upholstery Process Reclining Mechanism, Assembly/Motor Installation, Final Assembly and Shipping Value added vs. non-value added Final departments in production process Activity-Based Cost Information A. DEPARTMENTS: The following table shows the amount of workers and square footage in each of the 8 Operating and 2 Support departments. Department # of people Square Footage Operating Departments: 1. Cutting 4 10,000 2. Sewing 8 5,000 3. Stuffing 6 3,000 4. Wooden Framing 7 5,000 5. Upholstery 12 10,000 6. Reclining Mechanism 2 2,000 7. Assembly/Motor Installation 9 10,000 8. Final Assembly 7 8,000 Support Departments: 9. Receiving 2 20,000 10. Shipping 5 20,000 Department cost drivers: Direct Labor, Supplies, and Supervision are allocated based upon the number of people in each department. One-third of Equipment Depreciation is split evenly between Receiving and Stuffing due to the costly equipment in these two departments. The remaining portion is allocated to all departments (including Receiving and Stuffing) based on square footage. Maintenance, Quality Control, and Rework costs are each considered their own activity. Therefore, these costs are not allocated to the departments. Thirty percent of Tax & Insurance is allocated evenly between Receiving and Stuffing due to the heavy insurance on the equipment. The remaining cost is allocated to all departments (including Receiving and Stuffing) based on square footage. Activity-Based Cost Information B. ACTIVITIES: GC has identified the following seven activities within the manufacturing process: 1. Set-up 2. Run 3. Receiving 4. Shipping 5. Quality Control 6. Maintenance 7. Rework Note: The total Operating Departments cost must be allocated to two activities, Set-up and Run. Seventeen percent of this cost is Set-up costs, while the remaining eighty-three percent is Run costs. Product Cost Drivers GC has identified the following cost drivers to allocate costs to each product. Drivers Standard Special-order Set-up hours 1,532 1,820 Run hours 6,892 9,012 Batches 166 176 Maintenance requests 520 104 Defective units 1,800 360 Note: The cost driver for Receiving and Shipping is Batches. The cost driver for Quality Control is the number of units. B. ACTIVITY-BASED COSTING: 1. Calculate the profit margin per unit for each product using ABC. DISPLAY all calculations rounded to the nearest cent. Do NOT round the actual background numbers used for the calculations. The ABC cost computation includes two cost categories: a. Direct Materials cost b. Conversion costs: all other non-material cost activities 2. Explain why the conversion costs under ABC differ between the two products. Also explain why the conversion costs under ABC differ from those under traditional costing in this case. 3. Explain to what extent the ABC technique changes your mind in any way about pricing the products. 4. Using Activity-Based Management, what cost management or other suggestions can you make to improve GC Inc