PLEASE ANSWER THE FOLLOWING QUESTION (TIME SENSITIVE)

Petal 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. It uses these designs for one 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. (Click the icon to view the budgeted information.) Required Requirement 1. Identify the cost hierarchy level for each cost category Cost Cost Hierarchy Level Direct materials-purses Direct materials-backpacks Direct manufacturing labour-purses Direct manufacturing labour-backpacks Setup Shipping Design Plant utilities and administration Requirement 2. Identify the most appropriate cost driver for each cost category. Explain briefly your choice of cost driver. Cost Cost Driver Reason Direct materials-purses Direct materials-backpacks Direct manufacturing labourpurses Direct manufacturing labour-backpacks Setup Shipping Design Plant utilities and administration Requirement 3. Calculate the cost per unit of the cost driver for each cost category. (Round the direct materials and the direct labour rates to two decimal places as needed. Round the setup, the shipping, and the design rates to the nearest whole number. Round plant utilities and administration rate to four decimal places as needed.) = Cost driver rate DM-purses DM-backpacks DML-purses DML-backpacks Setup costs = = Shipping costs Design costs Plant util. and admin. Requirement 4. Calculate the total costs and the cost per unit for each product line. Backpacks Purses Direct materials Direct labour Setup Shipping Design Plant utilities and administration Total costs The cost per backpack is and the cost per purse is $[ (Round your answers to the nearest cent.) Requirement 5. Explain how you could use the information in Requirement 4 to reduce costs. Based on this analysis, over 50% of product cost relates to Managers should determine whether the costs can be reduced. Producing in small lots the setup and shipping costs. While both are relatively small components of product cost, management may want to evaluate ways to reduce the number of Of the indirect costs, the product- and facility-sustaining costs are the highest. Management should review the for cost savings and examine why it takes so long to produce purses relative to backpacks. 0 Budgeted information - Budgeted for Costs and Activities For the Year Ending February 28, 2019 Direct materials-purses $ 366,000 Direct materialsbackpacks 432,000 Direct labour-purses 95,000 Direct labour-backpacks 117,000 Setup 65,930 Shipping 73,910 Design 167,500 228,250 Plant utilities and administration $ 1,545,590 Total Other information: Backpacks 6,250 1,555 Purses 2,800 2,595 60 Total 9,050 4,150 Number of bags Hours of production Number of batches Number of designs 130 190 3 2 5