Two-Stage ABC for Manufacturing with ABC Variances Meade Manufacturing developed the following activity cost pool information for its current year manufacturing activities:

	Budgeted	Activity Cost
	Activity	Driver at Practical
	Cost	Capacity
Purchasing and materials handling	$760,000	950,000	kilograms
Setup	360,000	1,500	setups
Machine operations	2,464,000	14,000	machine hours
First unit inspection	448,000	1,600	batches
Packaging	160,000	200,000	units

Actual production information for three of Meades products during the year is as follows:

	Standard	Standard	Specialty
	Product A	Product B	Products
Units	35,000	15,000	10,000
Batches	140	50	400
Setups*	150	45	800
Machine hours	1,200	650	800
Kilograms of raw materials	175,000	65,000	95,000
Direct materials costs	$92,800	$70,960	$43,200
Direct labor costs	$152,800	$103,840	$72,000

*Some products require setups on two or more machines.

Required a. Determine the unit cost of each product for Meade Manufacturing under activity-based costing.

	Product A	Product B	Specialty Product
Unit cost	Answer	Answer	Answer

b. The unit cost of the specialty products is much higher than the unit cost of Standard Product A or Standard Product B due to: Answer Higher/Lower/Neither higher or lower number of machine hours per unit for specialty products Answer Larger/Smaller/Neither larger or smaller number of setups per batch for specialty products