In your role as management accountant, you have been concerned about the divisions manufacturing overhead cost allocation model. You believe that part of the problem AKS has with its existing range of electrical motor products is inaccurate costing.

Given the diversity in the range of electrical household products manufactured, AKS has contemplated switching the allocation of indirect manufacturing costs to an ABC system. Therefore, you decide to analyse the usefulness of an ABC system for AKS by applying this approach to the three different motor parts.

The analysis of $810 000 of indirect manufacturing costs indicates that they can be classified into four broad cost pools, with four different cost drivers. The budgeted indirect manufacturing costs for the motor parts product line for 2021 are shown in the following table.

Indirect manufacturing cost pool	Cost driver	Annual budgeted costs
1. Labour-related costs	Direct labour hours (DLHs)	$270 000
2. Machine-related operating costs	Machine hours	$350 000
3. Production scheduling and other set-up costs	Production runs	$120 000
4. Materials handling costs	Materials movements	$70 000
Total budgeted costs for all cost pools		$810 000

Budgeted production details for the motor part product line for 2021 are summarised in the next table.

Cost Driver Transactions	AKS001	AKS002	AKS003
DLHs per unit	2.00	1.50	1.25
Machine hours per unit	1.00	3.00	3.00
Number of production runs	50	150	200
Number of materials movements	90	260	350

1. Cost pool 1labour-related costs

Cost pool 1labour-related costs			$270 000
Budgeted direct labour hours (DLHs)
Model	Budgeted volume	DLHs per unit
AKS001
AKS002
AKS003
Total budgeted DLHs
Total-labour related costs/total budgeted DLHs
Labour related cost pool rate

2. Cost pool 2machine-related operating costs

Cost pool 2machine-related operating costs			$350 000
Budgeted machine hours (MHs)
Model	Budgeted volume	MHs per unit
AKS001
AKS002
AKS003
Total budgeted MHs
Total-machine related operating costs/total budgeted MHs
Machine-related operating cost pool rate

1. Cost pool 3production scheduling and other set-up costs

Cost pool 3production scheduling and other set-up costs	$120 000
Budgeted number of production runs
AKS001
AKS002
AKS003
Total budgeted production runs
Total production scheduling and other set-up related costs / Total budgeted production runs
Production scheduling and other set-up cost pool rates

2. Cost pool 4materials handling costs

Cost pool 4materials handling costs	$70 000
Budgeted number of materials movements
AKS001
AKS002
AKS003
Total budgeted materials movements
Total materials handling indirect costs / Total budgeted materials movements
Materials handling cost pool rate