Thornton Electronics produces video games in three market categories: commercial, home, and miniature. Thornton has traditionally allocated overhead costs to the three products using the companywide allocation base of direct labor hours. The company recently implemented an ABC system when it installed computer$-$controlled assembly stations that rendered the traditional costing system ineffective. In implementing the ABC system, the company identified the following activity cost pools and cost drivers:Thornton Electronics produces video games in three market categories: commercial, home, and miniature. Thornton has traditionally

allocated overhead costs to the three products using the companywide allocation base of direct labor hours. The company recently

implemented an ABC system when it installed computer$-$controlled assembly stations that rendered the traditional costing system

ineffective. In implementing the ABC system, the company identified the following activity cost pools and cost drivers:

Additional data for each of the product lines follow:

Required

a$.$ Determine the total cost and cost per unit for each product line, assuming that overhead costs are allocated to each product line

using direct labor hours as a companywide allocation base. Also determine the combined cost of all three product lines.

b$.$ Determine the total cost and cost per unit for each product line, assuming that an ABC system is used to allocate overhead costs.

Determine the combined cost of all three product lines.

Category Total Pooled Cost Types of Costs Cost Driver

Unit $ $424,000$ Indirect labor wages, supplies, factory utilities, machine maintenance Machine hours

Batch $242,400$ Materials handling, inventory storage, labor for setups, packaging, labeling and shipping, scheduling Number of production orders

Product $121,600$ Research and development Time spent by research department

Facility $316,000$ Rent, general utilities, maintenance, facility depreciation, administrative salaries Square footage

Additional data for each of the product lines follow:

Commercial Home Miniature Total

Direct materials cost $ $25\mathrm{.}16$ per unit $ $15\mathrm{.}16$ per unit $ $12\mathrm{.}16$ per unit $$

Direct labor cost $ $10\mathrm{.}80$ per hour $ $8\mathrm{.}80$ per hour $ $9\mathrm{.}80$ per hour $$

Number of labor hours $6,00012,0002,00020,000$

Number of machine hours $10,00045,00025,00080,000$

Number of production orders $2002,0008003,000$

Research and development time $10\%20\%70\%100\%$

Number of units $15,00045,00014,00074,000$

Square footage $20,00050,00030,000100,000$

Required

Determine the total cost and cost per unit for each product line, assuming that overhead costs are allocated to each product line using direct labor hours as a companywide allocation base. Also determine the combined cost of all three product lines.

Determine the total cost and cost per unit for each product line, assuming that an ABC system is used to allocate overhead costs. Determine the combined cost of all three product lines.