• Peroles Company produces two types of glasses, Red and Black. Currently overhead costs (approximately $250,000 a year) are allocated using direct labour cost. Information about the two product lines is provided below. Product Direct Labour Cost Material Cost Total Units Produced Red $300,000 $500,000 1,800 Black $450,000 $750,000 2,400 However, since they are currently having losses in their Red glasses department, they want to re-assess their costs using activity based costing. They have identified three primary drivers of overhead cost. Activity Budgeted Overhead Cost Allocation Base Total Usage Material handling $75,000 # of orders 250 orders Machine Processing $110,000 Machine Hours 8,000 hours Finishing $65,000 # of glasses tested 2,400 glasses tested Total $250,000 During the year, the company tracked the following activities: Product # of Orders # of Hours # of tests Red 75 2,750 600 Black 175 5,250 1,800 "a) What is the cost per unit for Red glasses using their current job costing system?" b) What is the cost per unit for Red glasses using ABC? c) What is the cost per unit for black glasses using their current job costing system? d) What is the cost per unit for black glasses using ABC? f) Assuming Red glasses are sold for $610 and black glasses sell for $725 and Kootenay Tire Company wants a contribution margin of 25% per tire, what are your pricing recommendations for Kootenay Tire Company?