Scenario: ABC Costing The new president of the Blake Company was stumped. Why had the gross profit margin percentage gone down? He had directed the sales department to push the product with the highest gross profit margin percentage, and the sales department had come through with flying colors. So what happened? Sales Price per Unit Direct Materials per Unit Direct Labor Cost per Unit Direct Labor Hours per Unit Number of Units Produced Flops Chops $150 $500 $50 $150 $15 $25 1 hours per unit 5 hours per unit 15,000 50,000 The estimated overhead for the coming year is estimated to be $2,650,000. Assignment Details Important! It is expected that the assignment will be completed using an Excel spreadsheet using formulas. Answer the following questions. 1. Calculate the Blake Company's estimated direct labor hours to produce flops and chops. 2. Calculate the predetermined overhead rate that will be used in the coming year using a traditional costing system based upon direct labor hours. 3. Using a traditional costing system based upon direct labor hours, compute unit product cost for flops and chops as well as the gross profit per unit. 4. It has been suggested to the president to consider the use of an ABC costing system to allocate manufacturing overhead. Engineering studies have revealed the following information about estimated manufacturing activities for the coming year. Activity Cost Pool Estimated Overhead Cost Setups $530,000 Scrap $425,000 Testing $325,000 Machine Related $1,370,000 Total $2,650,000 Expected Activity Level 200 setups 400 units 10,000 tests 60,000 machine hours