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Cain Components manufactures and distributes vanious plumbing products used in homes and other buildings. Over time, the production staff has noticed that products they considered

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Cain Components manufactures and distributes vanious plumbing products used in homes and other buildings. Over time, the production staff has noticed that products they considered easy to make were difficult to sell at margins considered reasonable, while products that seemed to take a lot of staff time were selling well despite recent price increases. A summer intern has suggested that the cost system might be providing misleading information The controller decided that a good summer project for the intern would be to develop, in one self-contained area of the plant, an altermative cost system with which to compare the current system. The intern identified the following cost pools and, after discussion with some plant personnel, appropriate cost drivers for each pool. There were Cost Pools Receiving Manufacturing Machine setup Shipping Costs $ 540,000 6,400,000 1,260,000 Activity Drivers Direct material cost Machine-hours Number of set-ups Units shipped S 1,400,000 In this partioular area, Cain produces two of its many products: Standard and Deluxe. The following are data for production for the latest full year of operations Products Standard $270,000 $700,000 200.000 Total direct material costs Total direct labor costs Total machine-hours Total number of setups Total pounds of material Total direct labor-hours Number of units produced and shipped Deluxe $180.000 $300.000 120.000 120 9.500 3,125 15,000 90 19,000 5,000 20,000 Required: a. The current cost accounting system charges overhead to products based on machine-hours.What unit product costs will be reported for the two products if the current cost system continues to be used? (Do not round intermediate calculations.) Standard Deluxe Direct costs Overhead Total costs 0 S 0 Number of units Unit cost 0 b. The inter suggests an ABC system using the cost drivers identdied above. What unit product costs will be reported for the two products d the ABC system is used? (Do not round intermediate calculations.) Standard Deluxe Direct Costs Overhead Receiving Manufacturing Machine setup Shipping Total costs S Number of units 0 Unit cost

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