Gibson Electronics produces video games in three market categories: commercial, home, and miniature. Gibson has traditionally allocated overhead costs to the three products using the companywide allocation base of direct labor hours. The company recently implemented an ABC system when it installed computer-controlled assembly stations that rendered the traditional costing system ineffective. In implementing the ABC system, the company identified the following activity cost pools and cost drivers: Category Unit Batch Product Facility Total Pooled Cost $ 392,000 218,400 113,600 308,000 Types of Costs Indirect labor wages, supplies, factory utilities, machine maintenance Materials handling, inventory storage, labor for setups, packaging, labeling and shipping, scheduling Research and development Rent, general utilities, maintenance, facility depreciation, administrative salaries Additional data for each of the product lines follow: Commercial $ 25.08 per unit $10.40 per hour 6,000 Direct materials cost Direct labor cost Number of labor hours Number of machine hours Number of production orders Research and development time Number of units 10,000 Home $ 15.08 per unit $ 8.40 per hour 12,000 45,000 Cost Driver Machine hours Number of production orders Time spent by research department Square footage Miniature $12.08 per unit $ 9.40 per hour 2,000 25,000 200 2,000 800 10% 20% 70% 15,000 20,000 45,000 50,000 14,000 30,000 Total 20,000 80,000 3,000 100% 74,000 100,000 Square footage Required a. Determine the total cost and cost per unit for each product line, assuming that overhead costs are allocated to each product line using direct labor hours as a companywide allocation base. Also determine the combined cost of all three product lines. b. Determine the total cost and cost per unit for each product line, assuming that an ABC system is used to allocate overhead costs. Determine the combined cost of all three product lines. Note: For all requirements, round intermediate calculations for allocation rates to 2 decimal places and all other calculations to the nearest whole dollar. Round "Cost per Unit" to 2 decimal places. Round your answers for "Total Cost" to the nearest whole dollar amount. Required a. Determine the total cost and cost per unit for each product line, assuming that overhead costs are allocated to each product line using direct labor hours as a companywide allocation base. Also determine the combined cost of all three product lines. b. Determine the total cost and cost per unit for each product line, assuming that an ABC system is used to allocate overhead costs. Determine the combined cost of all three product lines. Note: For all requirements, round intermediate calculations for allocation rates to 2 decimal places and all other calculations to the nearest whole dollar. Round "Cost per Unit" to 2 decimal places. Round your answers for "Total Cost" to the nearest whole dollar amount. Type of Product Total Cost Cost per Unit a. Commercial a. Home a. Miniature Combined total b. Commercial b. Home b. Miniature 0 Combined total $ 0 Rundle Sporting Goods Corporation makes two types of racquets, tennis and badminton. The company uses the same facility to make both products even though the processes are quite different. The company has recently converted its cost accounting system to activity-based costing. The following are the cost data that Jane Price, the cost accountant, prepared for the third quarter of the year (during which Rundle made 68,000 tennis racquets and 30,400 badminton racquets). Direct Cost Direct materials Direct labor Badminton Racquet (BR) Tennis Racquet (TR) $ 18.60 per unit 34.00 per unit $ 13.20 per unit 25.30 per unit Category Unit level Batch level Product level Facility level Total Estimated Cost $ 704,000 242,000 145,000 816,000 $ 1,907,000 Cost Driver Number of inspection hours Number of setups Number of TV commercials Number of machine hours Amount of Cost Driver TR: 14,200 hours; BR: 7,800 hours TR: 81 setups; BR: 40 setups TR: 4; BR: 1 TR: 30,800 hours; BR: 37,200 hours Inspectors are paid according to the number of actual hours worked, which is determined by the number of racquets inspected. Engineers who set up equipment for both products are paid monthly salaries. TV commercial fees are paid at the beginning of the quarter. Facility-level cost includes depreciation of all production equipment. Required a. Compute the cost per unit for each product. b. If management wants to price badminton racquets 30 percent above cost, what price should the company set? Required a. Compute the cost per unit for each product. b. If management wants to price badminton racquets 30 percent above cost, what price should the company set? Complete this question by entering your answers in the tabs below. Required A Required B If management wants to price badminton racquets 30 percent above cost, what price should the company set? (Round intermediate calculations and final answer to 2 decimal places.) Price of badminton racquets < Required A Required B > Vernon Chairs, Incorporated makes two types of chairs. Model Diamond is a high-end product designed for professional offices. Model Gold is an economical product designed for family use. Jane Silva, the president, is worried about cut-throat price competition in the chairs market. Her company suffered a loss last quarter, an unprecedented event in its history. The company's accountant prepared the following cost data for Ms. Silva: Direct Cost per Unit Direct materials Direct labor Category Unit level Batch level Product level Facility level Total Model Diamond (D) $ 20.30 per unit $ 17.40/hour 2.00 hours production time Estimated Cost Cost Driver $ 249,100 594,000 700,000 516,000 Number of units Number of setups Number of TV commercials Number of machine hours $ 2,059,100 Model Gold (G) $10.10 per unit $ 17.40/hour 1.00 hour production time Use of Cost Driver D: 17,000 units; G: 30,000 units D: 104 setups; G: 166 setups D: 7; G: 13 D: 2,200 hours; G: 2,100 hours The market price for office chairs comparable to Model Diamond is $119 and to Model Gold is $74. Required a. Compute the cost per unit for both products. b. Dan Barker, the chief engineer, told Ms. Silva that the company is currently making 163 units of Model Diamond per batch and 181 units of Model Gold per batch. He suggests doubling the batch sizes to cut the number of setups in half, thereby reducing the setup cost by 50 percent. Compute the cost per unit for each product if Ms. Silva adopts his suggestion. (For all requirements, round intermediate calculations and final answers to 2 decimal places.) Type of Product Cost per Unit a. Model Diamond a. Model Gold b. Model Diamond b. Model Gold