Hone Corp. manufactures computer desks in its Austin Texas, plant. The company uses activity-based costing to allocate all manufacturing conversion costs (direct labor and manufacturing overhead). Its activities and related data follow

Data Table

	Budgeted Cost			Cost
Activity	of Activity		Allocation Base	Allocation Rate
Materials handling. .	$310,000		Number of parts	$0.70
Assembling. . . . . . .	$2,300,000		Direct labor hours	$14.00
Painting. . . . . . . . . .	$180,000		Number of painted desks	$5.10

	Total	Total Direct	Total	Total Assembling
	Units	Materials	Number	Direct Labor
Product	Produced	Costs	of Parts	Hours
Standard desk. . . . . .	7,000	$120,750	120,500	6,300
Unpainted desk. . . . .	2,500	$34,350	30,500	1,200

Requirements

1. Compute the per-unit manufacturing product cost of Standard desks and Unpainted desks.

2. Premanufacturing activities, such as product design, were assigned to the Standard desks at $7 each and to the Unpainted desks at $3 each. Similar analyses were conducted of post-manufacturing activities, such as distribution, marketing, and customer service. The post-manufacturing costs were $20 per Standard and $19 per Unpainted desk. Compute the full product costs per desk.

3.Which product costs are reported in the external financial statements? Which costs are used for management decision making? Explain the difference.

4.What price should Hone's managers set for Standard desks to earn a $39 profit per desk?