Required information [The following information applies to the questions displayed below.) oped 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. ook 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: int Diomycin $ 210,000 255,000 7,250 1,050,000 Cost of direct materials Cost of direct labor Number of direct labor hours Number of capsules Homycin $ 270,000 239,000 6,850 505,000 Addolin $ 263,000 268,000 2,050 305,000 ences ADA has identified the following activities and cost drivers and has assigned them a total overhead cost of $202,500. Activity Machine setup Plant management Supervision of direct labor Quality inspection Order expediting Total overhead Cost Driver Setup hours Number of Workers Direct labor hours Inspection hours Customers served Budgeted Budgeted Cost Driver Overhead Cost Volume $ 16,500 1,650 36,500 1,250 46,500 16,500 50,900 1,075 52,100 670 $ 202,500 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. Activity Machine setup Plant management Supervision of direct labor Quality inspection Order expediting Total overhead Cost Driver Setup hours Number of Workers Direct labor hours Inspection hours Customers served Budgeted Cost Driver Overhead Cost Volume $ 16,500 1,650 36,500 1,250 46,500 16,500 50,900 1,075 670 $ 202,500 52,100 oped Takedo selected the cost drivers with the following justifications: ook 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. int 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. ences 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: Setup hours Number of workers Direct labor hours Inspection hours Customers served Diomycin Homycin 225 625 225 425 7,250 6,850 175 225 50 105 Addolin 825 625 2,050 725 525 Takedo gathered the following information about the cost driver volume for each product: Setup hours Number of workers Direct labor hours Inspection hours Customers served Diomycin Homycin 225 625 225 425 7,250 6,850 175 225 50 105 Addolin 825 625 2,050 725 525 oped ook Required: 1. 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. int Complete this question by entering your answers in the tabs below. ences Required 1 Required 2 Use 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 210,000.00 $ 255,000.00 $ Direct Materials Direct Labor Homycin 270,000.00 239,000.00 $ Addolin 263,000.00 268,000.00 $ $ $ 465,000.00 $ Overhead Total Cost Number of Capsules Cost per capsule 509,000.00 $ 505,000 531,000.00 305,000 1,050,000