Ice Cool produces two different models of air conditioners. The activities, costs, and cost drivers associated with the production processes follow.

ProcessActivityBudgeted CostActivity Cost DriverBudgeted Activity UsageAssemblyMachining$ 312,000Machine hours (MH)7,200Setups28,000Setups120$ 340,000FinishingInspecting$ 222,000Inspections900SupportPurchasing$ 130,000Purchase orders540

Additional production information concerning its two models follows.

Units and ActivitiesModel XModel ZUnits produced2,0004,000Machine hours2,2005,000Setups4080Inspections540360Purchase orders360180

Per UnitModel XModel ZSelling price per unit$ 400$ 380Direct materials cost per unit155110Direct labor cost per unit145120

1.Compute the activity rate for each activity using activity-based costing.

2.Using activity-based costing, compute the overhead cost per unit for each model.

3.Compute the total product cost per unit for each model.

4.For each model, compute the gross profit per unit (selling price per unit minus product cost per unit).

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