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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

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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 seling 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 inter 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 600,000 Direct material cost Manufacturing 5,see,000 Machine-hours Machine setup 900,000 Production runs Shipping 1, eee,000 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-hour's Total number of setups Total pounds of tertial Total direct labor-hours Number of units produced and shipped Products Standard Duluxe $240.ece $160.eee $662,00 $260.000 148.000 102,000 Be 120 9.500 6050 3.800 19.000 6,000 17.00 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 $1440.000 and the costs att louted to engineering are $684,000 After discussion with plant engineers, the intern decides that the best cost driver for engineering setups, because most of the work anses from changes in the way the product is run Required: a-1. Compute the totals of the cost driver rates shown below 2-2 What unit product costs will be reported for the two products the revised AB system is used

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