Peach Bags (PB) is a designer of high-quality backpacks and purses. Each design is made in small batches. Each spring, PB comes out with new designs for the backpack and for the purse. The company uses these designs for a year and then moves on to the next trend. The bags are all made on the same fabrication equipment that is expected to operate at capacity. The equipment must be switched over to a new design and set up to prepare for the production of each new batch of products. When completed, each batch of products is immediately shipped to a wholesaler. Shipping costs vary with the number of shipments. Budgeted information for the year is as follows:

Peach Bags
Budget for Costs and Activities
For the Year Ended February 28, 2014
Direct materials - purses	$317,208
Direct materials - backpacks	420,152
Direct manufacturing labor - purses	93,025
Direct manufacturing labor - backpacks	123,000
Setup	61,910
Shipping	69,905
Design	167,000
Plant utilities and administration	249,000
Total	$1,501,200
Other budget information follows:
Backpacks	Purses	Total
Number of bags	6,150	3,050	9,200
Hours of production	1,555	2,595	4,150
Number of batches	136	69	205
Number of designs	3	2	5

Calculate the budgeted cost per unit of cost driver for each cost category.

	Cost	/	Total quantity of cost driver	=	Cost driver rate
DMpurses	$	/	=	per purse

DMbackpacks	$	/	=	per backpack
DLpurses	$	/	=	per purse

DLbackpacks	$	/	=	per backpack
Setup costs	$	/	=	per batch

Shipping costs	$	/	=	per batch
Design costs	$	/	=	per design

Plant util. and admin.

$

/

=

per hour

Calculate the budgeted total costs and cost per unit for each product line.

Backpacks Purses

Direct Materials

Direct Labor

Setup

Shipping

Design

Plant utilities and

administration

Total Costs

The cost per backpack is $____ and the cost per purse is $____