Activity-based product cost improvement

Gourmet Master, Inc. used activity costing to determine the cost of its stainless steel ovens. Activity-based product cost information is as follows:

Activity	Activity-Base Usage (hrs. per unit)	Activity Rate per Hour	Activity Cost
Fabrication	0.75	$24.00	$18.00
Assembly	1.50	20.00	30.00
Inspection	0.30	25.00	7.50
Moving	0.25	12.00	3.00
Total Activity Cost per unit			$58.50

These activities only include the labor portion of the cost. Fabrication is the cutting and shaping of metal to be used in the assembly of the ovens. If the metal is not fabricated properly, additional time is required during final assembly to trim and adjust the metal pieces to fit properly. This has been a problem in Assembly. Management proposes improvements in Fabrication requiring the fabrication work to be done slower, but more accurately. As a result, the time in fabrication will increase to an hour per unit. However, because of the additional care, the carts are expected to fit better during assembly, thus reducing assembly time to 1.10 hours per unit.

a. Determine the revised activity-based cost per unit under the new fabrication plan. Round your answer to the nearest cent.

Activity cost per unit $___

b. Does this plan reduce the activity cost per unit of the oven?

________