Required information Problem 5-45 (Algo) Volume-Based Costing versus ABC [LO 5-1, 5-3, 5-5] [The following information applies to the questions displayed below] ADA Pharmaceutical Company produces three drugs-Diomycin, Homycin, and Addolin-belonging to the analgesic (pain- killer) family of medication. Since its inception four years ago. ADA has used a direct labor hour-based system to assign manufacturing overhead costs to products Eme Weissman, the president of ADA Pharmaceutical, has just read about activity-based costing in a trade journal With some curiosity and interest, she asked her financial controller, Takedo Simon, to examine differences in product costs between the firm's current costing and activity-based costing systems. ADA has the following budget information for the year: Homycin Addalin Cost of direct materials $ 201,200 241,400 Cost of direct labor 259,200 217,090 Number of direct labor hours 7,230 6,830 2,430 Number of capsules 1,030,900 303,090 ADA has identified the following activities and cost drivers and has assigned them a total overhead cost of $201,500. Budgeted Budgeted Cost Activity Coat Driver Overhead Cost Driver Volume Machine setup Setup hours $ 16,309 1,4:30 Plant management Number of Workers 96,900 1,230 Supervision of direct labor Direct labor hours 46,309 16,309 Quality Inspection Inspection hours 40,709 1,805 Order expediting Customers served 51,904 Total overand $301,509 Takedo selected the cost drivers with the following justifications SETUP HOURS: The cost driver of setup hours is used because the same product takes about the same amount of setup time regardless of size of batch. For different products, however, the setup time varies NUMBER OF WORKERS: Plant management includes plant maintenance and corresponding managerial duties that make production possible. This activity depends on the number of workers. The more workers involved, the higher the cost. DIRECT LABOR HOURS: Supervisors spend their time supervising production, The amount of time they spend on each product is proportional to the direct labor hours worked. AICDESTIMAI UP IDC- INSPECTION HOURS: Inspection involves testing a number of units in a batch, The time varies for different products but is the same for all similar products. NUMBER OF CUSTOMERS SERVED: The need to expedite production increases as the number of customers served by the company increases. Thus, the number of customers served by ADA is a good measure of expediting production orders Takedo gathered the following information about the cost driver volume for each product Diomycin Hamycin Addolim Setup hours 215 814 815 Number of workers 615 Direct labor hours 7,230 6,830 2,030 Inspection hours 165 215 715 Customers served 515 Part 1 (Algo) Required: Use the firm's current direct labor hour-based costing system to calculate the unit cost of each product 2. Use the activity-based costing system to calculate the unit cost of each product. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Upe the firm's current direct labor hour-based costing system to calculate the unit cost of each product. (Round your intermediate calculations and final answers to two decimal places.) Diomycin Hamycin Direct Materials Direct Labor 263,010 00 237,000.40 246 004.08 Overhead Toil Cast 161.050 04 105.098 68 Number of Capsules 503 DE Cost per capsule Required 2 >Required 1 Use the activity-based costing system to calculate the unit cost of each product. (Round intermediate calculations to 2 decimal places. Round "Cost per capsule\" to 2 decimal places.) Required 2 L LTI Direct Materials B 208000000 268000000 5 261,000.00 Direct Labor B 253,00000f $ 23700000 5 266,000.00 Total Cost 5 461,00000] 50500000 527,000.00 Number of Capsules 1,030,000 503,000 303,000 Cost per capsule