1. Sandifer Company is contemplating the establishment of an activity-based costing system. It current applies all overhead cost based on direct labor costs. The company has estimated the following costs and activities for May:

	Cost	Activity
Machine Setups	$33,600	400 setups
Utilities	60,000	200,000 usage hours
Materials Handling	84,000	12,500 crates
Direct labor	35,520	$20 per labor hour
Direct material	60,000	$1 per pound

Direct labor cost is $20 per hour. The following information pertains to the actual production of buckets and pails during May:

	Buckets	Pails
Units produced	60,000	40,000
Direct material cost incurred	$30,000	$31,200
Direct labor cost incurred ($20 per hour)	$24,000	$12,000
Setups implemented	120	290
Crates handled	6,800	5,200
Utility hours used	80,000	125,000

a. 1.Which items are cost pools?

2.Which are cost drivers?

3.Which are cost objectives?

b. How much is the product cost per pail if Sandifer uses one cost pool to allocate all overhead costs to the cost objectives?

c. How much is the product cost per pail if Sandifer uses ABC?