Several years after reengineering its production process, Biltmore Corporation hired a new controller, Christine Erickson. She developed an ABC system very similar to the one used by Biltmore's chief rival. Part of the resson Erickson developed the ABC system was because Biltmore's profits had been declining even though the company had shifted its product mix toward the product that had appeared most profitable under the old ayatem. Before adopting the new ABC system, Biltmore had used a plantvide overhead rate based on direct labor hours that was developed years ago. (Click the icon to view the overhead costs and budgeted data.) Read the requirements Requirement 1. Compute the gross profit per wheel if managers rely on the ABC unit cost data. (Enter amounts to two decimal places.) Begin by computing the total manufacturing cost per wheel for each wheel moel. Data Table Biltmore Corporation Total cost per unit using ABC data Standard Deluxe Manufacturing Overhead Costs per Unit Standard Deluxe ABC COS ................ 199.50 $ 372.50 Plantvidu overhead rale S 237.60 $ 334.40 The following data are budgeted for the company's Standard and Deluxe models for next year: Total manufacturing cost Deluxe 630.00 Standard Sales price per Wheel ........ $ 460.00 $ Direct materials per wheel $ 32.50 $ Direct labor per wheel $ 45.10 $ 46.50 53.50 Print Done Choose from any list or enter any number in the input fields and then click Check Answer. 2 i Requirements - X 1. Compute the gross profit per wheel if managers rely on the ABC unit cost data. 2. Compute the gross profit per wheel if the managers rely on the plantwide allocation cost data. 3. Which product line is more profitable for the company? 4. Why might the controller have expected ABC to pass the cost-benefit test? Were there any warning signs that the company's old direct-labor-based allocation system was broken? Print Done