Prescott, Inc. manufactures bookcases and uses an activity$-$based costing system. Prescott, Inc activity areas and related data follow:

View the activity areas and related data.

Prescott, Inc. produced two styles of bookcases in October: the standard bookcase and an unfinished bookcase, which has fewer parts and requires no finishing. The totals for quantities, direct materials costs,

and other data follow:

View the totals for quantities, direct materials costs, and other data.

Requirement $1.$ Compute the manufacturing product cost per unit of each type of bookcase. $($Enter a $"0"$ for any zero$-$balances.$)$

Standard Bookcase

Unfinished Bookcase Requirement $2.$ Suppose that pre$-$manufacturing activities, such as product design, were assigned to the standard bookcases at $$7$ each and to the unfinished bookcases at $$5$ each. Similar analyses were

conducted of post$-$manufacturing activities such as distribution, marketing, and customer service. The post$-$manufacturing costs were $$20$ per standard bookcase and $$16$ per unfinished bookcase. Compute

the full product costs per unit.

Standard Bookcase

Unfinished Bookcase

Requirement $3.$ Which product costs are reported in the external financial statements? Which costs are used for management decision making? Explain the difference.

are reported in the financial statements. Managers use

$,$ for decisions such as pricing and product emphasis. Requirement $4.$ What price should Prescott, Inc.$\text{'}$s managers set for unfinished bookcases to earn a net profit of $$17$ per bookcase?

To earn a net profit of $$17$ per unfinished bookcase, Prescott, Inc.$\text{'}$s managers should charge Activity Areas and Related Data

$*$Refers to number of units receiving the finishing activity, not the number of units transferred to Finished Goods

InventoryTotals for Quantities, Direct Materials Costs, and Other Data