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Exercise C: Activity-Based Costing (18pts) Erte, Inc. has the following predicted indirect costs and cost drivers for 2017 for the given activity cost pools: Manufacture Finishing Department Cost Driver Department Maintenance $30.000 S15,000 Machine hours Materials handling $40.000 525.000 Material moves Machine setups $80,000 $5,000 Machine setups Inspections $20,000 Inspection hours Total 150,000 S65.000 90 The following activity predictions were also made for the year: Manufacture Department Finishing Department Machine hours 15,000 8.000 Materials moves 5,000 3,500 Machine setups 150 Inspection hours 3,000 900 It is assumed that the cost per unit of activity for a given activity does not vary between departments. The company's president is trying to evaluate the company's product mix strategy regarding two of its four product models, K200 and V400. The company has been using a company-wide overhead rate based on machine hours but is considering switching to either department rates or activity-based rates. The production manager has provided the following data for the production of a batch of 150 units for each of these models: K200 V400 Direct materials cost $15,000 $22,000 Direct labor cost $7,000 $6,000 Machine hours (Manufacture) 700 900 Machine hours (Finishing) 400 300 Materials moves 60 80 Machine setups 9 12 Inspection hours 60 80 Required: 1. Determine the cost of one unit each of K200 and V400, assuming a company-wide overhead rate is used based on total machine hours. 2. Determine the cost of one unit each of K200 and V400, assuming department overhead rates are used. Overhead is assigned based on machine hours in both departments. 3. Determine the cost of one unit each of K200 and V400, assuming activity-based overhead rates are used for maintenance handling, machine setup, and inspection activities