Linacre Co operates an activity base costing system and has forecast the following the following information for next year.

Cost pool

Production setup

Product testing

Component supply and storage25,000 Customer orders and delivery112,500

Component cost: Direct labour Profit markup

Required:

$1.00 per unit

10 minutes per unit at $7.80 per hour 40% of total unit cost

Cost$

Cost Driver Number of drivers

setups 300 Test 1,500 Component order 500 Customer orders 1,000

105,000 300,000

General fixed overheads such as lighting and heating, which cannot be linked to any specific activity, are expected to be $900,000 and these overheads are absorbed on a direct labour hours basis. Total direct labour hours for next year are expected to be 300,000 hours.

Linacre Co expects orders for Product ZT3 next year to be 100 orders of 60 units per order and 60 orders of 50 units per order. The company holds no inventory of product ZT3 and will need to produce the order requirement in production runs of 900 units. One order for components is placed prior to each production run. Four tests are made during each production run to ensure that quantity standards are maintained. The following additional cost and profit information relates to product ZT3:

(a) Calculate the activity base recovery rate for each cost pool. (b) Calculate the total unit cost and selling price of product ZT3.