Louie Beton (LB) ABC Problem Louie Beton (LB) is a designer of high-quality bags and purses. Each design is made in small batches. Each summer, LB comes out with new designs for the bag and purse. The company changes these designs every year. The bags are all made on the same fabrication equipment that is expected to operate at capacity., The equipment must be switched over to a new design and set up to prepare to produce each new batch of products. When completed, each batch of products is immediately shipped to a wholesaler Shipping costs vary with the number of shipments. Budgeted for costs and activities for the year ending 2019 is as follows:

Direct materials - purses P319,155

Direct materials bags 454,995

Direct manufacturing labor purses 99,000

Direct manufacturing labor bags 113,000 `

Setup 64,000

Shipping 73,000

Design 169,000

Plant, utilities, and administration 221,000

Additional information:

BAGS PURSES

Number of products 6,175 3,075

Hours of production 1,665 1,585

Number of batches 120 80

Number of designs 2 2

Additional information:

BAGS PURSES

Number of products 6,175 3,075

Hours of production 1,665 1,585

Number of batches 120 80

Number of designs 2 2

Required:

1. Identify the most appropriate cost driver for each category, briefly Explain your choice of cost driver.
2. Calculate the budgeted cost per unit of cost driver for each category.
3. Calculate the budgeted total cost and cost per unit for each product line. Explain how you can use the information in letter C to reduce costs.