(L.OBJ. 1,2) Product costing in an ABC system [20-30 min] Allen, Inc., manufactures bookcases and uses an activity-based costing system. Allen's activity areas and related data follow: Budgeted Cost of Activity Cost Allocation Base Allocation Rate 0.90 12.00 3.90 Activity Materials handling $ 22,000 Number of parts Assembly Finishing 3,000,000 170,000 Direct labor hours Number of finished units Allen produced two styles of bookcases in April: the standard bookcase and an unfin- ished bookcase, which has fewer parts and requires no finishing. The totals for quan- tities, direct materials costs, and other data fo Total Total Direct TotalTotal Assembling UnitsMaterials Number Direct Labor Produced Costs of Parts Standard bookcase2,00029,600 82,000 28,600 86,000 Product Hours 3,300 2,000 Unfinished bookcase 2,600 Requirements Compute the manufacturing product cost per unit of each type of bookcase. Suppose that premanufacturing activities, such as product design, were assigned to the standard bookcases at $5 each, and to the unfinished bookcases at $4 each, Similar analyses were conducted of postmanufacturing activities such as distribution, marketing, and customer service. The postmanufacturing costs were $21 per standard bookcase and $18 per unfinished bookcase. Compute the full product costs per unit. 1. 2. 3. Which product costs are reported in the external financial statements? Which costs are used for management decision making? Explain the difference. What price should Allen's managers set for unfinished bookcases to earn a unit profit of $19? 4