Several years after reengineering its production process, Burke Corporation hired a new controller, Ashley Adams. She developed an ABC system very similar to the one used by Burke's chief rival. Part of the reason Adams developed the ABC system was because Burke's profits had been declining even though the company had shifted its product mix toward the product that had appeared most profitable under the old system. Before adopting the new ABC system, Burke had used a plantwide overhead rate based on direct labor hours that was developed years ago. E: (Click the icon to view the overhead costs and budgeted data.) Read the requirements. Requirement 1. Compute the gross profit per wheel if managers rely on the ABC unit cost data. (Enter amounts to two decimal places.) Begin by computing the total manufacturing cost per wheel for each wheel model. Burke Corporation Total cost per unit using ABC data Standard Deluxe Total manufacturing cost Data Table Manufacturing Overhead Costs per Unit Standard Deluxe ABC casts ..................$ 371.50 $ 516.50 Plantwide overhead rate ....... $ 384.80 $ 503.20 The following data are budgeted for the company's Standard and Deluxe models for next year: Standard Deluxe Sales price per wheel ....... $ 470.00 $ 630.00 Direct materials per wheel .... $ 30.00 $ 46.00 Direct labor per wheel ....... $ 45.90 $ 50.00 Print Done i Requirements 1. Compute the gross profit per wheel if managers rely on the ABC unit cost data. 2. Compute the gross profit per wheel if the managers rely on the plantwide allocation cost data. 3. Which product line is more profitable for the company? 4. Why might the controller have expected ABC to pass the cost-benefit test? Were there any warning signs that the company's old direct-labor-based allocation system was broken? Print Print Done Done