Corbertt Pharmaceuticals manufactures an over-the-counter allergy medication. The company sells both large commercial containers of 1,000 capsules to health-care facilities and travel packs of 20 capsules to shops in airports, train stations, and hotels. The following information has been developed to determine if an activity-based costing system would be beneficial:
Activity	Estimated Indirect Activity Costs	Allocation Base	Estimated Quantity of Allocation Base
Materials handling	$95,000	Kilos	19,000 kilos
Packaging	219,000	Machine hours	5,475 hours
Quality assurance	124,500	Samples	2,075 samples
Total indirect costs	$438,500
Other production information includes the following:
Commercial Containers		Travel Packs
Units produced	3,500 containers	57,000 packs
Weight in kilos	14,000	5,700
Machine hours	2,625	570
Number of samples	700	855
Requirements:
1. Compute the cost allocation rate for each activity.
2. Use the activity-based cost allocation rates to compute the activity costs per unit of the commercial containers and the travel packs. (Hint: First compute the total activity cost allocated to each product line, and then compute the cost per unit.)
3. Corbertt's original single-allocation-base costing system allocated indirect costs to produce at $157 per machine hour. Compute the total indirect costs allocated to the commercial containers and to the travel packs under the original system. Then compute the indirect cost per unit for each product.
4. Compare the indirect activity-based costs per unit to the indirect costs per unit from the single-allocation-base system. How have the unit costs changed? Explain why the costs changed.