The controller for Halifax Photographic Supply has established the following cost pools and cost drivers:

Activity Cost Pool			Budgeted Overhead Cost	Cost Driver			Budgeted Level for Driver	Pool Rate
Machine setups			$200,000	Number of setups			100	$2,000 per setup
Material handling			100,000	Pounds of raw material			50,000	$2 per pound
Hazardous waste control			50,000	Pounds of hazardous chemicals			10,000	$5 per pound
Quality control			75,000	Number of inspections			1,000	$75 per inspection
Other overhead costs			200,000	Machine hours			20,000	$10 per machine hr.
Total			$625,000
	An order for 1,200 boxes of film-development chemicals has the following production requirements:
		Machine setups			8
		Pounds of raw materials			16,000
		Pounds of hazardous chemicals			None
		Inspections			4
		Machine hours			400
		Direct materials and labor cost			$24,000

Halifax established a target price by adding a 40% markup to total manufacturing cost.

REQUIRED:

A. Determine the order's target price by using the activity-cost pools.

B. Assume that Halifax used a single, combined overhead rate based on weight of

raw materials.

1. Determine the predetermined overhead rate.
2. Determine the expected cost of the order.
3. Determine the target price. C. Which approach above ("A" or "B") seems to be a more reasonable method to

establish target prices? Explain.