Estin Company $($EC$)$ manufactures and sells hardware used in commercial building construction. At the company's Rivers Edge plant, EC manufactures two versions of one of its most popular products, HW$-10$ and HW$-20.$ EC's accounting system assigns manufacturing overhead using a pre$-$determined overhead rate based on direct laborcosts. This rate varies from plant to plant.

EC's CFO is considering adopting an ABC model for the company's costing systems. However, given the cost of new systems the CFO believes it would be prudent to test an ABC system at the Rivers Edge plant before deciding whether or not to role it out company wide.

A study team analyzed the Rivers Edge plant's production processes and identified four cost pools that captured the main functions related to the source of manufacturing overhead costs. After six months of discussion and analysis the team made the following forecasts of next year's costs:

Cost Pool

Inspections of RM

Assembly

Setting up

Packaging

Costs

$$400,000$

$$4,800,000$

$$760,000$

$$1,530,000$

Activity Drivers

number of shipments received from suppliers

number of machine hours

number of production runs

number of units manufactured

For the upcoming year the team had the following forecasted production details for HW$-10$ and HW$-20$:

$\backslash$table$[[,$HW$-10,$HW$-20],[$Units produced,$200,000,40,000],[$Direct Material costs each,$$15\mathrm{.}00,$$$35\mathrm{.}00$