Hammer Company produces a variety of electronic equipment. One of its plants produces two laser printers: the deluxe and the regular. At the beginning of the year, the following data were prepared for this plant:

	Deluxe	Regular
Quantity	100,000	800,000
Unit Prime Costs	$ 529.00	$ 483.00

The CFO has always used a pre-determined overhead rate to allocate overhead to the 2 product lines, they had traditionally used machine hours as the allocation base.

A recent new grad from Schulich had suggested the company consider Activity-Based Costing. A study was completed as shown below in part 2.

Required:

1. Using the traditional costing system, provide a product cost for each product line, please show all work.
2. Using the following data from ABC study, provide a product cost for each product line, please show all work.

Activity Driver	Activity Budget	Deluxe	Regular
Number of setups	$ 25,000,000	350	150
Machine Hours	$ 70,000,000	100,000	600,000
Engineering Hours	$ 15,000,000	50,000	100,000
Packing Orders	$ 2,000,000	100,000	400,000

3-Provide a report for management comparing your methods.