COST POOLS	COSTS	ACTIVITY DRIVERS
Receiving	600,000	Direct material cost
Manufacturing	5,500,000	Machine hours
Machine setup	900,000	Production runs
Shipping	1,000,000	Units shipped

In this particular area, Cain produces two of its many products: Standard & Deluxe. The following are data for production for the latest full year of operations.

	STANDARD	DELUXE
Total direct materials	245,000	155,000
Total direct labor costs	650,000	250,000
Total machine hours	150,000	100,000
Total # of setups	75	125
Total pounds of material	18,000	9,000
Total direct labor-hours	6,000	3,750
# of units produced and shipped	20,000	5,000

The costs attributed to production are 3,300,000 and the costs attributed to engineering are 2,200,000. 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.

A. What unit product costs will be reported for the two products if the revised ABC system is used?

B. Would you recommend that Cain Components adopt the intern's revised ABC system? Explain