McNeil Pharmaceuticals manufactures an overthecounter allergy medication called Breathe. McNeil is trying to win market share from Sudafed and Tylenol. The company has developed several different Breathe products tailored to specific markets. For example, the company sells large commercial containers of 1,000 capsules to health-care facilities and travel packs of 20 capsules to shops in airports, train stations, and hotels. McNeil's controller, Sandy Dean, has just returned from a conference on ABC. She asks Kalin Young, supervisor of the Breathe product line, to help her develop an ABC system. Dean and Young identify the following activities, related costs, and cost allocation bases: @ (Click the icon to view the information.) Read the muirements. Requirement 1. Determine the formula, then compute the cost allocation rate for each activity. (Round your answers to the nearest whole dollar. Abbreviations used: Mat.=Materials, QA=Quality assurance) Data table Activity cost allocation rate EX Estimated Indirect Activity Activity Costs Allocation Base Estimated Quantity of Allocation Base Materials handling ......... $ Packaging ................ Quality assurance ......... Total indirect costs ........ $ 130,000 Kilos 118,000 Samples 460,000 Machine hours 13,000 kilos 2,300 hours 2,000 samples The commercial-container Breathe product line had a total weight of 8,096 kilos, used 1,800 machine hours, and required 260 samples. The travelpack line had a total weight of 5,976 kilos, used 600 machine hours, and required 360 samples. McNeil produced 2,700 commercial containers of Breathe and 30,000 travel packs. Requirements 1. Compute the cost allocation rate for each activity. 2. Use the activitybased 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. The company's original single-allocation-based cost system allocated indirect costs to products at $300 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. 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