1. Use traditional indirect cost allocation to verify Arnie's cost and price estimates

2. Use the ABC method to estimate the indirect cost allocation and total cost for each model

sales figures collected for Quik-Sterz the year before were still accurate. Five activities and their cost drivers were iden- tified for the Medical Dynamics manufacturing operations marized in this table. Information y used an indirect cost al- (Table 15-12),. Also, the volumes for each model are sum- ation system based upon direct hours to manufacture for loc TABLE 15-11 Historical Records of Direct and Indirect Cost Analyses for Quik-Sterz Quik-Sterz Direct Cost (DC) Evaluation Direct Labor, S/Unit 5.00 10.00 Total Direct Direct Material, S/Unit 2.50 3.75 Direct Labor Hours/Unit 0.25 0.50 Labor Hours 187,500 125,000 Model Standard Premium Quik-Sterz Indirect Cost (IDC) Evaluation Sales Allocated IDC, $ 1.67 million 3.33 million Fraction IDC Allocated Model Standard Premium Direct Labor, Hours/Unit 0.25 0.50 Units/Year 750,000 250,000 Average direct labor rate is $20 per hour