! Required information 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 Receiving Manufacturing Machine setup Shipping Costs $ 600,000 5,500,000 900,000 1,000,000 Activity Drivers Direct material cost Machine-hours Production runs 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. Products Standard Deluxe Total direct material costs Total direct labor costs Total machine-hours $155,000 $245,000 $650,000 $430,000 114,000 136,000 Total number of setups 165 35 Total pounds of material 9,000 18,000 Total direct labor-hours 6,900 4,650 Number of units produced and shipped 18,000 7,000