Maloney Pharmaceuticals manufactures an over-the-counter allergy medication called Breathe and is Maloney Pharmaceuticals' controller, Sandra Dean, has just returned from a conference on ABC. trying to win market share from Sudafed and Claritin. Maloney Pharmaceuticals has developed several She asks Keith Yeung, supervisor of the Breathe product line, to help her develop an ABC . . . different Breathe products tailored to specific markets. For example, the company sells large commercial system. Dean and Yeung identify the following activities, related costs, and cost allocation bases: containers of 1,000 capsules to health-care facilities and travel packs of 20 capsules to shops in airports, (Click the icon to view the information.) train stations, and hotels. Requirements - X Additional information Requirements Estimated Estimated 1. Compute the cost allocation rate for each activity. 2. Use the activity-based cost allocation rates to compute the indirect cost of each unit Indirect Allocation Quantity of e of the commercial containers and the travel packs. (Hint: Compute the total activity costs allocated to each product line and then compute the cost per unit.) Activity Activity Costs Base Allocation Base 3 . Maloney Pharmaceuticals' original single-allocation-based cost system allocated Materials handling $ 112,000 Kilograms 16,000 kg indirect costs to products at $340 per machine hour. Compute the total indirect costs allocated to the commercial containers and to the travel packs under the Packaging 384,000 Machine hours .. . 2,400 hours original system. Then, compute the indirect cost per unit for each product. Quality assurance 101,250 Samples . 2,025 samples le 4. Compare the activity-based costs per unit to the costs from the original system. How have the unit costs changed? Explain why the costs changed as they did. 597,250 Total indirect costs . The commercial-container Breathe product line had a total weight of 7,800 kilograms, used 1,440 machine hours, and required 260 samples. The travel-pack line had a total weight of 5,800 kilograms, used 480 machine hours, and required 360 samples. Maloney produced 2,700 commercial containers of Breathe and 65,000 travel packs.Requirement 1. Compute the cost allocation rate for each activity. Determine the formula and then compute the cost allocation rate for each activity. (Round your answers to the nearest whole dollar.) Activity overhead rate Mat. handling / kg Packaging hour QA sample Requirement 2. Use the activity-based cost allocation rates to compute the indirect cost of each unit of the commercial containers and the travel packs. (Hint: Compute the total activity costs allocated to each product line and then compute the cost per unit.) (Round the cost per unit to the nearest cent.) Commercial Container Travel Pack Materials handling Packaging Quality assurance Total indirect costs / Number of units Indirect activity cost per unitRequirement 3. Maloney Pharmaceuticals's original single-allocation-based cost system allocated indirect costs to products at $340 per machine hour. Compute the total indirect costs allocated to the commercial containers and to the travel packs under the original system. Then, compute the indirect cost per unit for each product. Indirect cost Product allocated Commercial Travel Now compute the indirect cost per unit for each product under the original single-allocation-base system. (Round the cost per unit to the nearest cent.) Commercial Container Travel Pack Total indirect costs allocated / Number of units Indirect cost per unit Requirement 4. Compare the activity-based costs per unit to the costs from the original system. How have the unit costs changed? Explain why the costs changed as they did. The original system the commercial containers and the travel packs. The original system allocated However, commercial containers The ABC system So, relative to the original system, ABC allocates of the material handling and quality assurance costs to commercial containers