Part 127 Part 234 Production 500,000 100,000 Selling Price $31.86 $24.00 Prime costs per unit $9.53 $8.26 Number of production runs 100 200 Receiving orders 400 1,000 Machine hours 125,000 60,000 Direct labor hours 250,000 22,500 Engineering hours 5,000 5,000 Material moves 500 400 Overhead is allocated using a plant-wide rage based on direct labor hours. Overhead Cost Pools Setup costs Material handling costs Machine costs Receiving costs Engineering costs General plant costs Total $240,000 900,000 1,750,000 2,100,000 1,500,000 500,000 $6,990,000 Part 1: Compute overhead and gross margin using traditional costing Part 127 $ 880,000 Part 234 $ 880,000 $ 31.86 Per Unit Overhead/unit Gross Margin: Selling Price/unit Prime costs/unit Overhead/unit Gross margin/unit $9.53 $24.00 $ 8.26 $ $ $ $ Total Part 127 Part 234 Total Profit Part 3: Compute overhead and gross margin using Activity-based Costing Per Unit Part 127 Part 234 $ $ $ 31.86 $ 24.00 Overhead/unit Gross Margin: Selling Price/unit Prime costs/unit Overhead/unit Gross margin/unit $ $ $ $ $ $ Total Part 127 Part 234 Total Profit $ $ Part 4. Recommendations. Increase in price for Product 234 by 25% Part 234 Part 127 $ 31.86 $ $ 30.00 Per Unit Selling Price/unit Prime costs/unit Overhead/unit Gross margin/unit 5 S 5 $ Part 127 Part 234 Total Total Profit Part 5: Another reasonable recommendation to improve profitability. Explain recommendation here: You would make $6.00 more per unit on Part 234 Part 127 Part 224 $ $ Per Unit Selling Price/unit Prime costs/unit Overhead/unit Gross margin/unit $ s S Total Part 234 Part 127 Total Profit Part 6: Another reasonable recommendation to improve profitability, Explain recommendation here: In crease Part 234 by 25% Part 127 Part 234 $ S Per Unit Selling Price/unit Prime costs/unit Overhead/unit Gross margin/unit $ $ S $ S S Total Part 127 Part 234 Total Profit $