The firm has decided to implement an Activity-Based Costing system. There will be three cost pools: machining, finishing, and miscellaneous. Machining will be applied on the basis of MH, finishing will be applied on the basis of DLH, and miscellaneous will be applied on the basis of DM$. Extensive research and computations have produced the following estimated amounts in the cost pools for 2021: machining $822,700, finishing $1,145,600, and miscellaneous 599,100.

Compute the unit costs and gross margins for the two products using the ABC system as described above.

Problem 1. Tio Juano, Itd. makes a variety of metal wall hangings that are sold mainly to tourists. At the beginning of January 2021, the firm estimated the following for the year: Unit sales Average unit selling price DM DL OH DL hours Machine hours 23,000 $245 $1,799,750 888,950 2,567,400 45,000 170,000 On December 2021, the following actual amounts were reported: Unit sales Average unit selling price DM DL OH DL hours Machine hours 28,300 $265 $2,209,500 987,400 2,693,400 56,800 175,000 The most popular products is the Kokopeli silhouette dancing in the desert. It sells for $195 per unit. The second most popular product is a stand of Pacific cypress trees growing by the ocean. It sells for $320 per unit. The expected costs and resources consumed for one unit of each of the two products are as follows Kokopeli Cypress trees DM $18.50 $105.70 25.60 69.30 -DL DLH MH 1.3 6.8 2.5 3.7