1. Tempestuous Inferno Corporation is considering the use of activity-based costing system. The following information is provided for the production of two product lines:

Activity	Cost		Allocation Base
Set Up	$523,100		# of set ups
QC Inspections	$245,090		# of inspections
Machine Maintenance	$98,380		Machine Hours
Direct Labor Cost	$915,000
	Product FI	Product RE	Total
Direct Labor Hours	9,685	16,050	25,735
Number of Set Ups	85	125	210
Number of Inspections	5,200	4,800	10,000
Number of Machine Hours	10,065	14,730	24,795
Direct Material Per Unit	$121.65	$82.50

Tempestuous Inferno Corporation plans to manufacture 3,045 Product FI and 2,540 Product RE.

Instructions:

1. Compute the ABC manufacturing cost of Product FI. Include in this cost Direct Materials, Direct Labor, and Overhead per unit. (10 points)
2. Compute the ABC manufacturing cost of Product RE. Include in this cost Direct Materials, Direct Labor, and Overhead per unit. (10 points)
3. Using a single base allocation method, using direct labor hours as your driver, compute the product cost of Product FI. Include in this cost Direct Materials, Direct Labor, and Overhead per unit. (10 points)
4. Using a single base allocation method, using direct labor hours as your driver, compute the product cost of Product RE. Include in this cost Direct Materials, Direct Labor, and Overhead per unit. (10 points)
5. After all is said and done, which of the previous two methods is a superior measurement? Why? (2 points)