Costume Kings has two product lines: machine-made costumes and hand-made costumes. The company assigns $80,000 in manufacturing overhead costs to two cost pools: power costs and inspection costs. Of this amount, the power cost pool has been assigned $32,000 and the inspection cost pool has been assigned $48,000. Additional information about each product line is shown below.

	Machine-Made			Hand-Made
Sales revenue	$	240,000		$	160,000
Direct labor and materials costs	$	120,000		$	96,000
Units produced and sold		48,000			16,000
Machine hours		96,000			4,000
Square feet of production space		1,200			800
Material orders received		150			100
Quality control inspection hours		2,000			500

a.

Allocate the manufacturing overhead from the activity cost pools to each product line.

Allocation of power-cost pool to each product line:
Step 1:		% of total
Machine hours used for machine-made costumes			%
Machine hours used for hand-made costumes			%
Total machine hours	0	0	%
Step 2:
Costs allocated to machine-made costumes
Costs allocated to hand-made costumes
Total power costs allocated to products		0
Allocation of inspection-cost pool to each product line:
Step 1:		% of total
Inspection hours for machine-made costumes			%
Inspection hours for hand-made costumes			%
Total inspection hours	0	0	%
Step 2:
Costs assigned to machine-made costumes
Costs assigned to hand-made costumes
Total inspection costs allocated to products		0

b.

Compute the cost per unit of machine-made costumes and hand-made costumes. (Round your answers to two decimal places.)

	MACHINE MADE COSTUMES	HAND MADE COSTUMES
MANUFACTURING COST PER UNIT

c.

On a per-unit basis, which product line appears to be the most profitable?

(Round your answers to two decimal places.)

	MACHINE MADE COSTUMES	HAND MADE COSTUMES
PROFITABLITY PER UNIT