***5.70 is correct. However, machine depreciation, setup labor, material handling aren't.

Required information Upriver Parts manufactures two products, V-1 and V-2, at its River Plant. Selected data for an average month for the two products follow. Units produced Direct materials cost per unit Machine hours per unit Production runs per month V-1 10,000 $ 2 1 80 V-2 1,000 $ 4 2 40 Production at the plant is automated and any labor cost is included in overhead. Data on manufacturing overhead at the plant follow. Machine depreciation Setup labor Material handling Total $36,000 18,000 14,400 $68,400 Required: a. Upriver currently applies overhead on the basis of machine hours. What is the predetermined overhead rate for the month? (Round your answer to 2 decimal places.) b. Upriver is thinking of adopting an ABC system. They have tentatively chosen the following cost drivers: machine hours for machine depreciation, production runs for setup labor, and direct material dollars for material handling. Compute the cost driver rates for the proposed system at Upriver. a. Overhead rate Machine depreciation Setup labor Material handling 5.70 per machine hour 8 per machine hour 8 per production run 81% direct material cost Required: a. Compute the unit costs for the two products V-1 and V-2 using the current costing system at Upriver (using machine hours as the allocation basis). (Do not round intermediate calculations. Round your answers to 2 decimal places.) b. Compute the unit costs for the two products V-1 and V-2 using the proposed ABC system at Upriver. (Do not round intermediate calculations. Round your answers to 2 decimal places.) Answer is complete but not entirely correct. Unit Cost V-1 V-2 a. A Using current costing system Using proposed ABC system 7.70 7.40 $ $ 5.70 % 18.40 A