Churchill Products is considering updating its cost system to an activity-based costing system and is interested in understanding the effects. The companys cost accountant has identified three overhead cost pools along with appropriate cost drivers for each pool.

Cost Pools	Costs			Activity Drivers
Utilities	$	320,000		64,000	machine-hours
Scheduling and setup		310,000		620	setups
Material handling		795,000		1,590,000	pounds of material

The company manufactures three models of water basins (Oval, Round, and Square). The plans for production for the next year and the budgeted direct costs and activity by product line are as follows.

	Products
	Oval			Round			Square
Total direct costs (material and labor)	$	80,000		$	80,000		$	90,000
Total machine-hours		30,000			12,000			22,000
Total number of setups		80			320			220
Total pounds of material		540,000			270,000			780,000
Total direct labor-hours		3,000			2,000			5,000
Number of units produced		4,000			2,000			6,000

Required:

a. The current cost accounting system charges overhead to products based on direct labor-hours. What unit product costs will be reported for the three products if the current cost system continues to be used? c. What are the cost driver rates for the three cost pools identified by the cost accountant? d. What unit product costs will be reported for the three products if the ABC system suggested by the cost accountant's classification of cost pools is used? e. If management should decide to implement an activity-based costing system, what benefits should it expect?