10.31 Volume based and ABC allocations, manufacturing x Incorrect. The Acme Corporation manufactures a number of different kinds of sprinklers in three broad product lines. The following table provides relevant information about the product lines. Hand-Held Lawn Sprinklers Estate Sprinklers Units 1,000,000 2,000,000 40,000 Price per unit $8.50 $15.00 Variable costs 2.00 4.00 4.50 Labor hours /unit 2.2 hours 1.9 hours 2.1 hours Batch size 10,000 units 5,000 units 1,000 units $9.00 Currently, Acme incurs total overhead of $12,776,400 per year and allocates it to individual products using labor hours as the allocation basis. Required: (Round computations and answers to two decimal places, eg $7.89, if it is a negative profit margin show the amount in parenthesis.) a. Determine product profitability under the current method for allocating overhead costs. Profit margin/unit. Hand Held per unit Lawn Sprinklers per unit Estate Sprinklers per unit b. Based on your answers to part (a), Acme's CEO wishes to expand the sales of estate sprinklers and deemphasize lawn sprinklers. However, because the firm's operating personnel seem cool to this idea, the CEO asks you to refine the product cost estimates and shore up her case. You find that $7,300,800 of the overhead is labor related, with the remainder relating to the number of batches run. How does this new information affect your estimates of product profitability? Profit margin/unit. Hand Held per unit Lawn Sprinklers per unit Estate Sprinklers per unit