THE SMITH COMPANY produces two types of kayaks, Basic and Deluxe. Their simple costing system has two direct-cost categories (materials and labor) and one indirect-cost pool. The simple costing system allocates indirect costs on the basis of machine-hours. Recently, the market share of Basic kayaks is declining and they are concerned about it. The information about products is given a follows:

BasicDeluxe

Quantity sold1,600900

Price per unit62.5100

Direct material cost/unit1522.5

Direct manufacturing labor cost/hr88

Direct manufacturing labor-hours per unit 0.751.125

Production scheduling2042.5

Material handling3684

Setting up the machines22.577.5

Assembly or machine hours2,7502,250

Assessment 12575

They wanted to apply the ABC system but are concerned about how it would affect their product costing decision. After analyzing the indirect-cost pool for THE SMITH CO., they classified six activities as indirect costs: production scheduling, material handling, machine setup, assembly, inspection, and marketing. Data related to the indirect-cost activities:

Production scheduling or runs$47,500

Material handling$22,500

Setting up the machines$12,500

Assembly $30,000

Assessment $4,000

Marketing (1.5%of sales revenue)

Calculate the cost of Basic and Deluxe kayaks.under

1. the existing simple costing system.

2.an activity-based costing system.

3.Compare the costs of the kayaks in requirements 1 and 2.