International Steel Company has budgeted manufacturing overhead costs of $1,974,000. It has allocated overhead on a plant-wide basis to its two products (soft steel and hard steel) using machine hours, which are estimated to be 100,000 for the current year. The company has decided to experiment with activity-based costing and has created five activity cost pools and related activity cost drivers as follows: Activity Centre | | Cost Driver | | Estimated Overhead | | Estimated Activity | Material handling | | Number of moves | | $294,000 | | | 42,000 | moves | Purchase orders | | Number of orders | | $105,000 | | | 1,400 | orders | Product testing | | Number of tests | | $440,000 | | | 4,000 | tests | Machine set-up | | Number of set-ups | | $325,000 | | | 5,000 | set-ups | Machining | | Machine hours | | $810,000 | | | 100,000 | machine hours | | | | | | | | | | Each unit of the products requires the following: | | Soft Steel | | Hard Steel | | Direct materials costs | | $300 | | $200 | | Direct labour costs | | $120 | | $60 | | Purchase orders | | 2 | | 3 | | Machine set-up | | 5 | | 10 | | Product testing | | 3 | | 4 | | Machining | | 50 | | 50 | | Material handling | | 4 | | 6 | | | | | |