1. Compute the cost allocation rate for each activity. 2. Use the activity-based cost allocation rates to compute the indirect cost of each unit of the commercial containers and the travel packs. (Hint: Compute the total activity costs allocated to each product line and then compute the cost per unit.) 3. The company's original single-allocation-based cost system allocated indirect costs to products at $350 per machine hour. Compute the total indirect costs allocated to the commercial containers and to the travel packs under the original system. Then compute the indirect cost per unit for each product. 4. Compare the activity-based costs per unit to the costs from the original system. How have the unit costs changed? Explain why the costs changed as they did. Estimated Indirect Allocation Estimated Quantity Activity Activity Costs Base of Allocation Base Materials handling $ 160,000 Kilos 20,000 kilos Packaging 2,000 hours Quality assurance 390,000 Machine hours 112,000 Samples 662,000 1,600 samples Total indirect costs The commercial-container Breathe product line had a total weight of 8,700 kilos, used 900 machine hours, and required 270 samples. The travel-pack line had a total weight of 4,450 kilos, used 300 machine hours, and required 370 samples. Jacobson produced 3,000 commercial containers of Breathe and 20,000 travel packs. Requirement 1. Determine the formula, then compute the cost allocation rate for each activity. (Round your answers to the nearest whole dollar. Abbreviations used: Mat.=Materials, QA=Quality assurance) Activity cost allocation rate Cost allocation base (estimated) = Estimated indirect activity cost 160,000 Mat. handling $ 20,000 $ = 8 per kilo Packaging 390,000 2,000 195 per hour QA $ 112,000 1,600 $ 70 per sample Requirement 2. Use the activity-based cost allocation rates to compute the indirect cost of each unit of the commercial containers and the travel packs. (Hint: Compute the total activity costs allocated to each product line and then compute the cost per unit.) (Round the cost per unit to the nearest cent.) Commercial Container Materials handling Packaging Quality assurance Total indirect costs / Number of units 3,000 Indirect activity cost per unit