Led 2.1 P24-27A Comparing costs from ABC and single-rate systems Corbertt Pharmaceuticals manufactures an over-the-counter allergy medication. The company sells both large commercial containers of 1,000 capsules to health-care facilities and travel packs of 20 capsules to shops in airports, train stations, and hotels. The following information has been developed to determine if an activity-based costing system would be beneficial: Estimated Indirect Cost Estimated Quantity of Allocation Base Allocation Base Activity Materials handling Packaging Quality assurance Total indirect costs $ 95,000 225,000 124,500 $ 444,500 Number of kilos Number of machine hours Number of samples 19,000 kilos 3,000 hours 1.500 samples Actual production information includes the following: Commercial Containers Travel Packs 3,500 containers 57,000 packs Units produced Weight in kilos Machine hours Number of samples 13,485 2,430 645 5,515 570 855 Requirements 1. Compute the predetermined overhead allocation rate for each activity. 2. Use the predetermined overhead allocation rates to compute the activity-based costs per unit of the commercial containers and the travel packs. Round to two decimal places. (Hint: First compute the total activity-based costs allocated to each product line, and then compute the cost per unit.) 3. Corbertt's original single plantwide allocation rate costing system allocated indirect costs to products at $148.17 per machine hour. Compute the total indirect costs allocated to the commercial containers and to the travel packs under the original system. Then compute the indirect cost per unit for each product. Round to two decimal places. 4. Compare the indirect activity-based costs per unit to the indirect costs per unit from the traditional system. How have the unit costs changed? Explain why the costs changed