Whitestone Company produces two subassemblies, JR-14 and RM-13, used in manufacturing trucks. The company is currently using an absorption costing system that applies overhead based on direct labor hours. The budget for the current year ending December 31, 20x1, is as follows:

WHITESTONE COMPANY Budgeted Statement of Gross Margin for 20x1
	JR-14			RM-13			Total
Sales in units		5,000			5,000			10,000
Sales revenue	$	1,700,000		$	2,200,000		$	3,900,000
Cost of goods manufactured and sold:
Beginning finished-goods inventory	$	240,000		$	300,000		$	540,000
Add: Direct material		1,000,000			1,750,000			2,750,000
Direct labor		185,185			92,593			277,778
Applied manufacturing overhead*		544,025			272,013			816,038
Cost of goods available for sale	$	1,969,210		$	2,414,606		$	4,383,816
Less: Ending finished-goods inventory		240,000			300,000			540,000
Cost of goods sold	$	1,729,210		$	2,114,606		$	3,843,816
Gross margin	$	(29,210	)	$	85,394		$	56,184

*Applied on the basis of direct-labor hours:
Machining	$	424,528
Assembly		216,981
Material handling		56,604
Inspection		117,925
Total	$	816,038

Mark Ward, Whitestone’s president, has been reading about a product-costing method called activity-based costing. Ward is convinced that activity-based costing will cast a new light on future profits. As a result, Brian Walters, Whitestone’s director of cost management, has accumulated cost pool information for this year shown on the following chart. This information is based on a product mix of 5,000 units of JR-14 and 5,000 units of RM-13.

Cost Pool Information for 20x1
Cost Pool	Activity	JR-14		RM-13
Direct labor	Direct-labor hours	10,000		5,000
Machining	Machine hours	15,000		30,000
Assembly	Assembly hours	6,000		5,500
Material handling	Number of parts	5		10
Inspection	Inspection hours	5,000		7,500

In addition, the following information is projected for the next calendar year, 20x2.

	JR-14		RM-13
Beginning inventory, finished goods (in units)	800		600
Ending inventory, finished goods (in units)	700		700
Sales (in units)	5,100		4,900

On January 1, 20x2, Whitestone is planning to increase the prices of JR-14 to $355 and RM-13 to $455. Material costs are not expected to increase in 20x2, but direct labor will increase by 8 percent, and all manufacturing overhead costs will increase by 6 percent. Due to the nature of the manufacturing process, the company does not have any beginning or ending work-in-process inventories.

Whitestone uses a just-in-time inventory system and has materials delivered to the production facility directly from the vendors. The raw-material inventory at both the beginning and the end of the month is immaterial and can be ignored for the purposes of a budgeted income statement. The company uses the first-in, first-out (FIFO) inventory method.

Required:
2.	Using activity-based costing, calculate the total cost for the following activity cost pools: machining, assembly, material handling, and inspection. (For the total costs, round to the nearest dollar.) Then, calculate the pool rate per unit of the appropriate cost driver for each of the four activities. (Round your answers to 2 decimal places. Omit the "$" sign in your response.)

	Total costs for activity cost pools	Pool rate per unit
Machining	$	$	per machine hour
Assembly	$	$	per assembly hour
Material handling	$	$	per part
Inspection	$	$	per inspection hour

3.	Prepare a table showing for each product line the estimated 20x2 cost for each of the following cost elements: direct material, direct labor, machining, assembly, material handling, and inspection. (Round your answers to the nearest dollar amount. Omit the "$" sign in your response.)

	JR-14 Estimated 20x2 Product Cost	RM-13 Estimated 20x2 Product Cost
Direct material	$	$
Direct labor
Machining
Assembly
Material handling
Inspection
Total cost	$	$

4.

Prepare a budgeted statement showing the gross margin for Whitestone Company for 20x2, using activity-based costing. The statement should show each product and a total for the company. Be sure to include detailed calculations for the cost of goods manufactured and sold. (Round your answers to the nearest dollar amount. Input all amounts as positive values except losses which should be indicated by a minus sign. Omit the "$" sign in your response.)

WHITESTONE COMPANY Budgeted Statement of Gross Margin for 20x2
	JR-14	RM-13	Total
Sales revenue	$	$	$
Cost of goods manufactured and sold:
Beginning finished-goods inventory	$	$	$
(Click to select)AddLess : Direct material
Direct labor
Machining
Assembly
Material handling
Inspection
Cost of goods available for sale	$	$	$
(Click to select)LessAdd : Ending finished-goods inventory
Cost of goods sold	$	$	$
Gross margin	$	$	$