Product X	Product Y
Direct Cost (material plus labor	$9,000,000	$4,000,000
Environmental Support costs		$14,000,00
Nonenvironmental support costs	$22,000,000	$29,000,000
Total Machine hours	10,000,000	6,000,000
Number of Units	100,000,000	40,000,000

Compute product costs per unit for Product X and Y using the current indirect cost rate based on machine hours for manufacturing support cost.

Compute product cost per unit for Products X and Y using the activity-based costing figures provided in the table.

Explain the reasons for the difference in cost for each using the two-cost systems.

Bevans has been selling Product Product X and Y at a price equalto 1.5 times the product cost computed using the machine-hour-based cost driver rate for manufacturing support costs. Compute these prices and provide recommendations to the Bevens management concerning profit improvement through pricing changes, cost reduction through manufacturing improvements.