ABC; pricing Chester Inc. has identified activity centers to which overhead costs are assigned. The cost pool amounts for these centers and their selected activity drivers for the year follow.

Activity Centers	Costs	Activity Drivers
Utilities	$4,680,000	90,000 machine hours
Scheduling and setup	4,258,800	1,170 setups
Material handling	9,984,000	2,400,000 pounds of material

The companys products and other operating statistics follow.

	Product A	Product B	Product C
Direct costs	$312,000	$312,000	$351,000
Machine hours	45,000	15,000	30,000
Number of setups	195	570	405
Pounds of material	750,000	450,000	1,200,000
Number of units produced	60,000	30,000	90,000
Direct labor hours	48,000	27,000	75,000

a. Calculate the unit cost for each product using the appropriate cost drivers for each product. Note: Round your final answers to two decimal places (i.e. round $4.355 to $4.36).

	Product A	Product B	Product C
Unit cost	Answer	Answer	Answer

b. Before it installed an ABC system, Chester used a traditional costing system that allocated factory overhead to products using direct labor hours. The firm operates in a competitive market and sets product prices at cost plus a 25 percent markup. Calculate the unit cost for each product based on traditional costing. Note: Round your final answers to two decimal places (i.e. round $4.355 to $4.36).

	Product A	Product B	Product C
Unit cost	Answer	Answer	Answer

c. Determine selling prices based on unit costs for traditional costing, using the rounded rate from part (b). Note: Round your final answers to two decimal places (i.e. round $4.355 to $4.36).

Traditional costing	Product A	Product B	Product C
Selling price	Answer	Answer	Answer

d. Determine selling prices based on unit costs for ABC, using the rounded rates from part (a). Note: Round your final answers to two decimal places (i.e. round $4.355 to $4.36).

Traditional costing	Product A	Product B	Product C
Selling price	Answer	Answer	Answer

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