McNeil Pharmaceuticals manufactures an over-the-counter allergy medication called Breathe and is McNeil Pharmaceuticals' controller, Sandra Dean, has just returned from a conference on ABC. trying to win market share from Sudafed and Claritin. McNeil 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 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 rateAdditional information Estimated Estimated Indirect Allocation Quantity of Activityr Activity |Costs Base Allocation Base Materials handling .......... $ WEDGE] Kilograms ....... 1?,000 kg Packaging ................ 432,000 Machine hours . . . 2,?00 hours Qualitv assurance .......... 96,000 Samples ........ 2,000 samples Total indirect costs .......... $ 698,000 The commercialcontainer Breathe product line had a total weight of T300 kilograms, used 1.5% machine hours, and required 260 samples. The travelpack line had a total weight of 5.6% kilograms, used 5130 machine hours, and required 360 samples. McNeil produced 2,?[10 commercial containers of Breathe and 45,0012} travel packs. -@ Requirements 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 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.) 3. McNeil Pharmaceuticals' original singleallocationbased cost system allocated indirect costs to products at $320 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. 4. ICompare the activity-based costs per unit to the costs from the original system. Hovl.r have the unit costs changed"? Explain why the costs changed as they did. .@