Problem 5-45 Volume-Based Costing versus ABC [LO 5-1,5-3,5-5) The following information applies to the questions displayed below.] ADA Pharmaceutical company produces three drugs-Diomycin, Homycin, and Addolin-belonging to the analgesic painkiller family of medication. Since its inception four years ago. ADA has used a direct labor hour-based system to assign manufacturing overhead costs to products. Eme Weissman, the president of ADA Pharmaceutical, has just read about activity-based costing in a trade journal. With some curiosity and interest, she asked her financial controller, Takedo Simon, to examine differences in product costs between the firm's current costing and activity based costing systems ADA has the following budget information for the year. Diamycin Addon Coat of direct materials Howyn $117.000 $257, 010 $250,00 Coat of direct labor 242,000 226,000 255,100 Number of dirt Babor hours 7.120 5.720 3,120 Number of emples 920,000 492,010 292,100 ADA has identified the following activities and cost drivers and has assigned them a total overhead cost of $196,000. Activity Machine setup Plant management Supervision of direct later Quality Inspection Under expediting Total verhand Cont Desver Setup hours Sumber of Workers Direct Saber hour Inspection hours Customer served ludgeted Overhead $ 15,00 35,200 45,200 41.600 50, 10D $196,100 ludgeted Cart Driver 3,520 2,120 15,200 2,10 Takedo selected the cost drivers with the following justifications SETUP HOURS: The cost driver of setup hours is used because the same product takes about the same amount of setup time regardless of size of batch For different products, however the setup time varios NUMBER OF WORKERS: Plant management includes plant maintenance and corresponding managerial duties that make production possible. This activity depends on the number of workers. The more workers involved, the higher the cost. DIRECT LABOR HOURS: Supervisors spend their time supervising production. The amount of time they spend on cach product is proportional to the direct labor hours worked INSPECTION HOURS. Inspection involves testing a number of units in a batch. The time varies for different products but is the same for all similar products NUMBER OF CUSTOMERS SERVED: The need to expedite production increases as the number of customers served by the company increases. Thus, the number of customers served by ADA is a good measure of expediting production orders Takedo gathered the following information about the cost driver volume for each product Homycin 56 36 Adelin 760 560 Setup Number of worker Direct labor her Inspection hours Customer served Diomycin 160 160 7,130 130 37 660 16 92 Part 1 Required: 1. Use the firm's current costing system to calculate the unit cost of each product 2. Use the activity-based cost system to calculate the unk cost of each product. Complete this question by entering your answers in the tabs below. Required Required a Use the firm's current costing system to calculate the unit cost of each product found intermediate calculations to 2 decimal places. Round "Cost per capsule to 2 decimal places.) Diomycin Homycin Addin Direct Materials $ 197,000.00 $ 257,000.00 250,000.00 Direct Libor $ 243,000.00 3 225,000.00 $ 255,000.00 Oversead Total Coat $ 430,000.00 $ 493,000.00 $ 505.000 DO Packard $ 920,000.00 3 402.000.00 $ 232.000 DO Cooper