Pumpkin Bags (PB) is a designer of high-quality backpacks and purses. Each design is made in small batches. Each spring, PB comes out with new designs for the backpack and the purse. The company uses these designs for a year and then moves on to the next trend. The bags are all made on the same fabrication equipment that is expected to operate at capacity. The equipment must be switched over to a new design and set up to prepare for the production of each new batch of products. When completed, each batch of products is immediately shipped to a wholesaler. Shipping costs vary with the number of shipments. Budgeted information for the year is as follows: (Click the icon to view the budgeted information.) Read the requirements Requirement 1. Identify the cost hierarchy level for each cost category. Cost Direct materials-purses Direct materials-backpacks Direct labor-purses Direct labor-backpacks Setup Shipping Design Plant utilities and administration Cost Hierarchy Level K Pumpkin Bags (PB) is a designer of high-quality backpacks and purses. Each design is made in sm company uses these designs for a year and then moves on to the next trend. The bags are all mac be switched over to a new design and set up to prepare for the production of each new batch of pro costs vary with the number of shipments. Budgeted information for the year is as follows: (Click the icon to view the budgeted information.) Read the requirements. Requirement 1. Identify the cost hierarchy level for each cost category. Cost Direct materials-purses Direct materials-backpacks Direct labor-purses Direct labor-backpacks Setup Shipping Design Plant utilities and administration Cost Hierarchy Level www. is a designe designs fo a new desig umber of sh Data table o view the b nts. Pumpkin Bags Budget for Costs and Activities For the Year Ended February 29, 2020 Direct materials-purses $ 334,750 Direct materials-backpacks 456,300 entify the cos Direct manufacturing labor-purses 97,500 st Direct manufacturing labor-backpacks 117,000 purses Setup 51,750 backpacks Shipping 72,000 ses kpacks Design 162,500 Plant utilities and administration 253,500 $ 1,545,300 Total Other budget information follows: Backpacks Purses Total administration Number of bags 5,850 3,250 9,100 Hours of production 1,600 2,625 4,225 Number of batches 163 62 225 Number of designs 2 3 5 ore help Print Done - - X brin atic etec Requirements ement 1. Identif Cost materials-purse materials-back labor-purses labor-backpack ing in utilities and admi 1. Identify the cost hierarchy level for each cost category. 2. Identify the most appropriate cost driver for each cost category. Explain briefly your choice of cost driver. 3. Calculate the budgeted cost per unit of cost driver for each cost category. 4. Calculate the budgeted total costs and cost per unit for each product line. 5. Explain how you could use the information in requirement 4 to reduce costs. Print Done -