DP, Inc. produces parts for industrial grinders. The typical product goes through two processes, machining and finishing, before being packaged and shipped to the customer. DP holds no finished goods inventory. All production is triggered by a customer order. The company uses a traditional cost system and applies overhead to jobs based on machine hours. The cost accounting manager at DP has been considering updating its cost system given the growth in overhead costs. He has collected data on the major categories of overhead. The estimated annual costs follow.

20 DP, Inc. produces parts for industrial grinders. The typical product goes through two processes, machining and finishing, before being packaged and shipped to the customer. DP holds no finished goods inventory. All production is triggered by a customer order. The company uses a traditional cost system and applies overhead to jobs based on machine hours. 10 points The cost accounting manager at DP has been considering updating its cost system given the growth in overhead costs. He has collected data on the major categories of overhead. The estimated annual costs follow. Skipped Overhead Category Material handling Machining Finishing Shipping Setups Total Annual Cost $ 3,750,000 7,500,000 2,500,000 1,875,000 4,375,000 $20,000,000 eBook Print C As part of the effort to determine whether it would be worthwhile to update the cost system, the cost accounting manager has collected data on three representative jobs completed in April. Data on those jobs follow. References Job 8404 Job 407 $ 30,780 $57,000 Job 0411 $102,100 Direct material 4,000 2,010 Machine hours Units Production runs Orders 1,610 1,010 1 1 2,010 1,210 3 2 1 1 The cost accounting manager has a tentative design for an ABC system to replace the current cost system. His system has five activities. Data on the activities and the cost drivers for each activity are given as follows. Activity Material Handling Machining Finishing Shipping Setups Cost Driver Material cost Machine hours Units Orders Production runs Annual Cost Driver volume $7,500,000 250,000 125,000 100 175 Required: a. What is the unit cost for each of the three jobs assuming DP, Inc. continues to use its current costing system? b. What is the unit cost for each of the three jobs assuming DP, Inc. adopts the ABC system as designed by the cost accounting manager? (Do not round intermediate calculations. Round your final answers to 2 decimal places.) Unit Cost Job 0407 Job 0404 Job 0411 a. Using the current costing system