Cain Components manufactures and distributes various 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 alternative 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 Costs Activity Drivers Receiving 6e8,eee Direct material cost Manufacturing 5,588,888 Machine-hours Machine setup 9e8,eee Production runs Shipping 1,888,888 Units shipped $ In this particular area. Cain produces two of its many products: Standard and Deluxe. The following are data for production for the latest full year of operations. 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 Products Standard Deluxe $220, eee $180,000 $650, eee $380, eee 140, eae 110,000 18e 1ee 15,500 11,5ee 6,250 4, eee 15, eae 10,eee The intern decides to look more closely at the manufacturing activity and determines that it can be broken down into two activities: production and engineering. Production covers the costs of ongoing manufacturing while engineering includes those activities dealing with engineering changes, design modifications, and so on. The costs attributed to production are $6.600.000 and the costs attributed to engineering are $4,100,000. After discussion with plant engineers, the intern decides that the best cost driver for engineering is setups, because most of the work arises from changes in the way the product is run. Required: 0-1. Compute the totals of the cost driver rates shown below. --2. What unit product costs will be reported for the two products if the revised ABC system is used? Complete this question by entering your answers in the tabs below. Reg A1 Reg A2 Compute the totals of the cost driver rates shown below. (Round intermediate calculations and "Manufacturing" answer to 2 decimal places.) Receiving Production % of material dollars per machine-hour Engineering Machine setup per setup per setup Shipping per unit Reg A1 Reg A2 What unit product costs will be reported for the two products if the revised ABC system is used? (Round "Unit cost" answers to 2 decimal places.) Standard Deluxe Direct Costs Overhead: Receiving Production Engineering Machine setup Shipping Total costs $ 0 $ 0 Number of units Unit cost 0 0
