Lutz, Inc. produces three products: Quality, Superior, and Superb. The Lutz cost accounting system applied Conversion Costs using a Plant-Wide Application Rate using Direct Labor Hours as the Cost Driver. Lutz is thinking of employing an ABC system for Conversion Costs.
Lutz concluded that its plant had six activities with the following Cost Drivers and costs budgeted for the upcoming year:
Activity Area		Budgeted Costs		Cost Driver
Material Handeling		$258,400		Number of Parts
Production Scheduling		$114,000		Number of Orders
Setups		$160,000		Number of Setups
Machinery Cost and Maint		$3,510,000		Machine Hours
Finishing		$1,092,000		Direct Labor Hours
Packaging/Shipping		$190,000		Number orders Shipped
TOTAL		$5,324,400
It is estimated that there will be 54,600 Direct Labor Hours in the upcoming year
The following information summerizes Lutz' Projections of the Cost Drivers listed above by Product type
Cost Driver		Quality	Superior	Superb
Units to be produced		10,000	5,000	800
# of parts per unit		30	50	120
Production orders		300	70	200
Production Setups		100	50	50
Machine Hrs per unit		7	7	15
DLH per unit		2	5	12
Orders shipped		1,000	2,000	800
Direct Labor		$69.11	$72.50	$83.22
Direct Materials		$83.00	$97.00	$115.00
Lutz uses a 30% markup above cost to bid for their projects. What are the costs they currently use with the Plant-wide model?
What Should the prices be if we used ABC?
Discussion topic: What does the difference suggest we might be doing wrong with our bids? And if you were the CFO what activity area would you look to improve and give a few generic examples of options for improvement.

ALERT: I need help with the Topic Discussion questions, not the other stuff. I already know about what ABC is. That is not what the question is asking. If you do not know how to explain it to me, then please do not answer my question. I really do not like wasting my questions.