Exhibit 1 DIRECT LABOR, OVERHEAD, AND DIRECT MATERIALS COSTS Total direct labor $1,000,000 Total overhead $2,000,000 Overhead rate 200% of direct labor Widgets direct labor $100,000 Gadgets direct labor $300,000 Smidgets direct labor $400,000 Smadgets direct labor $200,000 Widgets direct material $100,000 Gadgets direct material $200,000 Smidgets direct material $150,000 Smadgets direct material $250,000 Units built 1,000 of each product Exhibit 2 OVERHEAD COST DRIVERS Cost allocation bases Total costs Quantity of CAB Depreciation $300,000 3,000 machine hours Set-up $700,000 1,000 set-up hours Rent $1,000,000 100,000 square feet Exhibit 3 PRODUCT RESOURCE REQUIREMENTS BY COST DRIVER Widgets Gadgets Smidgets Smadgets 500 machine hours 900 machine hours 400 machine hours 1,200 machine hours 200 set-up hours 300 set-up hours 100 set-up hours 400 set-up hours 20,000 square feet 30,000 square feet 10,000 square feet 40,000 square feet