The Uticle Music Company produces only two instruments: bagpipes and accordions. The company uses a normal cost system and overhead costs are currently allocated using a plant-wide overhead rate based on direct labor hours. Outside cost consultants have recommended, however, that the company use activity-based costing to charge overhead to products. The company expects to produce 3,500 bagpipes and 2,500 accordions in 2029. Each bagpipes instrument requires two direct labor hours to produce and each accordion requires one-half hour to produce. The direct material and direct labor costs included in the two products are as follows: Item Bagpipes Accordions Direct materials per unit $32 $15 Direct Labor per unit $15 $ 5 Budgeted (Estimated) Total Factory Overhead Data For 2019: > Activity Budgeted Overhead Dollars Estimated Volume Level Production Setups $80.000 20 setups Material Handling $70.000 5,000 lbs. Packaging and Shipping $120,000 6,000 boxes Total Factory Overhead $270,000 Based on an analysis of the three overhead activities, it was estimated that the two products would require these activities as follows in 2019: HorribleSubs - So b... DOUBLE DEGREE... LH: Packaging and Shipping $120.000 Total Factory Overhead $270,000 6,000 boxes Based on an analysis of the three overhead activities, it was estimated that the two products would require these activities as follows in 2019: Activity Bagpipes Accordions Overall Totals Production Setups 5 15 20 Material Handling (lbs.) 2.000 3,000 5.000 Packaging and Shipping (boxes) 3,500 2,500 6.000 Required: 1. Calculate the cost of each product using a plant-wide rate based on direct labor hours. 2. Calculate the activity cost rates for (a) setups, (b) material handling and (c) packaging and shipping. 3. Cost out the two products using an activity-based costing system. 4. What are the implications for Utricle of the ABC derived costs? 5. Since the cost information is always better with ABC than with traditional volume based methods, why don't all firms use it? 6. Give at least three indicators that afirms should consider using ABC if it is not already doing so. WE