Required: Assaing that each of two customers produces gross profits of $100,000, calculate the profitability from each builder after taking into account the support activity required for each builder. Exercise C: Activity-Based Costing Erte, Inc. has the following predicted indirect costs and cost drivers for 2017 for the given activity cost pools: C Maintenance Materials handling Machine setups Inspections Manufacture Department $30,000 $40,000 $80,000 SO 150,000 Finishing Cost Driver Department $15,000 Machine hours $25,000 Material moves $5,000 Machine setups $20,000 Inspection hours $65,000 Total The following activity predictions were also made for the year: Manufacture Department 15,000 Machine hours Finishing Department 8,000 3,500 Materials moves 5,000 Machine setups 900 150 Inspection hours 0 3,000 It is assumed that the cost per unit of activity for a given activity does not vary between departments. The company's president is trying to evaluate the company's product mix strategy regarding two of its four product models, K200 and V400. The company has been using a company-wide overhead rate based on machine hours but is considering switching to either department rates or activity-based rates. The production manager has provided the following data for the production of a batch of 150 units for each of these models: K200 V400 $22,000 $15,000 $7,000 $6,000 700 900 C Direct materials cost Direct labor cost Machine hours (Manufacture) Machine hours (Finishing) Materials moves Machine setups Inspection hours 400 300 60 80 9 12 60 80 Required: 1. Determine the cost of one unit each of K200 and V400, assuming a company-wide overhead rate is used based on total machine hours. 2. Determine the cost of one unit each of K200 and V400, assuming department overhead rates are used. Overhead is assigned based on machine hours in both departments. 3. Determine the cost of one unit each of K200 and V400, assuming activity-based overhead rates are used for maintenance handling, machine setup, and inspection activities