Kerox company manufactures two types of laser printers: Monochrome and Multifunction. Currently, manufacturing overhead is allocated based solely on the consumption of direct labor hours. For the upcoming quarter, the company expects to produce 2,000units of monochrome printers and 1,300 units of multifunction printers. The following table outlines the selling price, material and labor cost for each unit of monochrome and multifunction laser printers manufactured.

Monochrome- Selling Price- $110, Direct material- $20, Direct Labor- $5

Multifunction- Selling Price- $395, Direct material- $80, Direct Labor- $22

The company is considering changing its current costing system to the ABC costing system. If it decided to use this method, it would separate the manufacturing support cost into three activities: Handling purchase orders, inspecting and setting up production flow. The budgeted manufacturing overhead cost expected for;

Purchase orders- $10,000

Inspections- $6,000

Product setups- $9,000

The following table indicates the cost allocation usage for each product.

Monochrome-

# of purchased order 70

# of inspections 50

# of setups 75

Multifunction-

# of purchased order 110

# of inspections 250

# of setups 375

Require:

1) Compute activity rates for purchase order, inspections and set ups (remember to use total expected activity for both products in computing the denominator)

2) For each product, calculate the manufacturing cost per unit under the ABC Costing system

3)Compute the profit margin (profit) for each product based on the total expected units to be produced and sold.