Problem 9 46 Activity Based Costing and Predetermined Overhead Rates (LO 9 3, 5, 6) Cain Components manufactures and distributes various plumbing products used in homes and other buildings Over time, the production staff has noticed that products they considered easy to make were difficult to sell at margins considered reasonable while products that seemed to take a lot of staff time were selling well despite recent price increases A summer intern has suggested that the cost system might be providing misleading information The controller decided that a good summer project for the intern would be to develop,in one self contained area of the plant, an alternative cost system with which to compare the current system The intern identified the following cost pools and, after discussion with some plant personnel, appropriate cost drivers for each pool There were Cost Pools Costs Activity Drivers Receiving 600000 Direct material cost Manufacturing 5500000 Machine hours Machine Setup 900000 of setups Shipping 1000000 Units Shipped In this particular area, Cain produces two of its many products Standard and Deluxe The following are data for production for the latest full year of operations Standard Deluxe total direct material costs 245000 155000 total direct labor costs 650000 250000 total machine hours 150000 100000 total of setups 75 125 total pounds of material 18000 9000 toal direct labor hours 6000 3750 of units produced and shipped 20000 5000 The intern decides to look more closely at the manufacturing activity and determines that it can be broken down into two activities production and engineering Production covers the costs of on going manufacturing while engineering includes those activities dealing with engineering changes, design modifications, and so on The costs attributed to production are $3,300,000 and the costs attributed to engineering are $2,200,000 After discussion with plant engineers, the intern decides that the best cost driver for engineering is setups, because most of the work arises from changes in the way the product is run What unit product costs will be reported for the two products if the revised ABC system is used (Round your intermediate computations and final answers to two decimal places ) Receiving of material dollars Manufacturing per machine hour Enginerring per setup Machine setup per setup Shipping per unit Standard Deluxe Direct costs Overhead Receiving Manufacturing Engineering Machine setup Shipping Total costs of units Unit cost

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Problem 9-46 Activity-Based Costing and Predetermined Overhead Rates (LO 9-3, 5, 6) Cain Components manufactures and distributes various plumbing products used in homes and other

Problem 9-46 Activity-Based Costing and Predetermined Overhead Rates (LO 9-3, 5, 6)

Cain Components manufactures and distributes various plumbing products used in homes and other buildings. Over time, the production staff has noticed that products they considered easy to make were difficult to sell at margins considered reasonable while products that seemed to take a lot of staff time were selling well despite recent price increases. A summer intern has suggested that the cost system might be providing misleading information.

The controller decided that a good summer project for the intern would be to develop,in one self-contained area of the plant, an alternative cost system with which to compare the current system. The intern identified the following cost pools and, after discussion with some plant personnel, appropriate cost drivers for each pool. There were:

Cost Pools	Costs	Activity Drivers
Receiving	600000	Direct material cost
Manufacturing	5500000	Machine hours
Machine Setup	900000	# of setups
Shipping	1000000	Units Shipped

In this particular area, Cain produces two of its many products: Standard and Deluxe.The following are data for production for the latest full year of operations:

	Standard	Deluxe
total direct material costs	245000	155000
total direct labor costs	650000	250000
total machine hours	150000	100000
total # of setups	75	125
total pounds of material	18000	9000
toal direct labor hours	6000	3750
# of units produced and shipped	20000	5000

The intern decides to look more closely at the manufacturing activity and determines that it can be broken down into two activities: production and engineering.Production covers the costs of on-going manufacturing while engineering includes those activities dealing with engineering changes, design modifications, and so on.

The costs attributed to production are $3,300,000 and the costs attributed to engineering are $2,200,000. After discussion with plant engineers, the intern decides that the best cost driver for engineering is setups, because most of the work arises from changes in the way the product is run.

What unit product costs will be reported for the two products if the revised ABC system is used? (Round your intermediate computations and final answers to two decimal places.)