Blackhawk Company manufactures and sells many different types of tables. Blackhawk uses a single production facility to manufacture its tables. Historically, indirect costs have been allocated to products using a traditional method. The allocation base is direct labor dollars. The overhead rate is predetermined, based on budgeted volumes and budgeted direct labor.

For the upcoming year, Blackhawk compiled the following projected per-unit information for one of its tables the Stanley model (named for its original designer). The following information is based on the traditional costing system:

Selling price	$900
Direct materials	$250
Direct labor	$120
Indirect costs	$355
Profit per unit	$175

The CFO has suggested that an activity-based costing system could be valuable to help facilitate strategic and operational decisions for the coming year. She obtained the following additional, projected information for the next year.Note: These totals are company-wide, not just for the Stanley model.

Activity	Cost Driver	Cost	Total
Setups	# batches	$500,000	725 batches
Machine-related	# machine-hours	$4,410,000	65,000 MHs
Packing	# of shipments	$60,000	2,500 shipments

Finally, the following information is projected for the Stanley model for the next year:

Number of units per batch	125
Number of machine hours per unit	0.5
Number of units per shipment	2

Questions

Part 1

Using the information provided, compute thetotal cost per unitfor the Stanley model, using activity-based costing. Include the steps of your calculation.

Part 2

What does your analysis suggest about decisions that have been made in the past (i.e., before Blackhawk's use of activity-based costing) regarding the Stanley model?

Part 3

Identify and describe the implications of your analysis for Blackhawk'sother modelsof tables.