California Circuits Company (3C) manufactures a variety of components. Its Valley plant

specializes in two electronic components used in circuit boards. These components serve the same

function and perform equally well. The difference in the two products is the raw material. The XLD

chip is the older of the two components and is made with a metal that requires a wash prior to

assembly. Originally, the plant released the wastewater directly into a local river. Several years

ago, the company was ordered to treat the wastewater before its release, and it installed relatively

expensive equipment. While the equipment is fully depreciated, annual operating expenses of

$250,000 are still incurred for wastewater treatment.

Two years ago, company scientists developed an alloy with all of the properties of the raw

materials used in XL-D that generates no wastewater. Some prototype components using the new

material were produced and tested and found to be indistinguishable from the old components in

every way relating to their fitness for use. The only difference is that the new alloy is more

expensive than the old raw material. The company has been test-marketing the newer version of

the component, referred to as XL-C, and is currently trying to decide its fate.

Manufacturing of both components begins in the Production Department and is completed in

the Assembly Department. No other products are produced in the plant. The following provides

information for the two components:

	XL-D	XL-C
Units produced	100,000	25,000
Direct material costs per unit	$12	$14
Direct Labor Information
Direct labor-hours per unitProduction	0.1	0.1
Direct labor-hours per unitAssembly	0.4	0.4
Direct labor rate per hourall labor	$20	$20
Other Activity Information
Machine-hours per unitProduction	1.6	1.6
Machine-hours per unitAssembly	0.4	0.4
Testing hours per unit	3.0	3.0
Shipping weight per unit (pounds)	1.0	1.6
Wastewater generated per unit (gallons)	10.0	0.0

Annual overhead costs for the two departments follow:

Production Department	Assembly Department
$1,050,000	$500,000

The company president believes that it's foolish to continue producing two essentially

equivalent products. At the same time, the corporate image is somewhat tarnished because of a

toxic dump found at another site (not the Valley plant). The president would like to be able to point

to the Valley plant as an example of company research and development (R&D) working to

provide an environmentally friendly product. The controller points out to the president that the

company's financial position is shaky, and it cannot afford to make products in any way other than

the most cost-efficient one.

B. The controller recently completed an executive education course describing the two-stage allocation procedure. Assume that the first stage allocates costs to departments and the second stage allocates costs to products. The controller believes that the costs will be more accurate if machine-hours are used to allocate Production Department costs and direct labor-hours are used to allocate Assembly Department costs. What per unit product costs will be reported for the two products if the two-stage allocation process is used? Use the tab "Requirement B" in the Excel template to answer this question. Set up a chart similar to Exhibit 9.9 in the textbook (see page 359) to show your answer. Do not round intermediate calculations. You must show the work of your calculations, so you must use cell referencing to set up the elements in your chart.