LO17-6, LO17-7 Downhill Fast manufactures three ski products: boots, poles, and helmets. The company allocates PROBLEM 17.7B manufacturing costs to each product line based on machine-hours. A large portion of its manufact ABC versus Use of a Single turing overhead cost is incurred by the Maintenance Department. This year, the department antici- Activity Base pates that it will incur $250,000 in total costs. The following estimates pertain to the upcoming year; Estimated Estimated Units Product Machine-Hours of Production Boots . . . . 5,000 50,000 Poles . . . . 10,000 200,000 Helmets . . 35,000 20,000 Carol Safooma, the company's cost accountant, suspects that unit costs are being distorted by using a single activity base to allocate Maintenance Department costs to products. She is consider- ing the implementation of an activity-based costing system (ABC). Under the proposed ABC system, the maintenance costs would be allocated to the following activity cost pools using the number of work orders as an activity base: (1) the equipment set-up pool, and (2) the custodial pool. Of the 2,400 work orders filed with the Maintenance Department each year, approximately 600 relate to equipment set-up activities, whereas 1,800 relate to custo- dial functions. Equipment set-ups correlate with the number of production runs associated with each product line. Thus, the equipment set-up pool would be allocated based on the number of production runs required for each product. Custodial services correlate with square feet of production space and would be allocated based on the space required to produce each product line. The following table provides a summary of annual production activity and square footage requirements