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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
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 $1,440,000 90,000 machine hours Scheduling and setup 1,310,400 1,170 setups Material handling 3,072,000 2,400,000 pounds of material The company's products and other operating statistics follow. Product A Product B Product C Direct costs $96,000 596,000 $100,000 Machine hours 45,000 15,000 30,000 Number of setups 199 570 405 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 costs OX OX OX 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 costs OXS Oxs OX 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 Selling price Product A Product B Product C $ Ox $ OXS OX 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 OX OX OX
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