The Westwood Printing Company prints limited edition art books with production runs from 15,000 to 100,000. It has recently adopted an activity-based-costing system to assign manufacturing overhead to products. The following data relate to the one product, a limited edition book of art entitled; Art of the 20^th Century,andthe ABC cost pools:

Art of the 20^th Century:

Annual production 40,000 units

Direct materials per unit $37

Direct labour per unit $8

Manufacturing overhead cost pools:

Cost Pool Cost Cost Driver

Materials ordering $ 840,000 Number of purchase orders

Materials inspection 525,000 Number of receiving reports

Equipment setup 2,500,000 Number of setups

Quality control 1,000,000 Number of inspections

Other 25,000,000 Direct labour cost

Total manufacturing overhead $29,865,000

Annual activity information related to cost drivers:

Cost Pool All Books Art of the 20^th Century

Materials ordering 120,000 orders 1,200

Materials inspection 2,100 receiving reports 315

Equipment setup 125 setups 1

Quality control 5,000 inspections 500

Other $12,500,000 direct labour $320,000

Required:

1. Calculate the overhead rate per unit of activity for each of the five cost pools.

1. Calculate the total overhead assigned to the production of the Art of the 20^th Century. Round to two decimal places.

1. Calculate the overhead cost per unit for the Art of the 20^th Century.

1. Calculate the total unit cost for the Art of the 20^th Century.

1. Suppose the Westwood Printing Company allocates overhead by a traditional volume-base method using direct labour dollars as the allocation base and one cost pool. For the "traditional method;

1. Determine the overhead rate per direct labour dollar
2. Determine the per unit overhead assigned to Art of the 20^th Century.

1. What are two or three differences between the traditional method and the activity-based-costing approach?