Wiremold produces over a hundred different type os residential water faucets
This Plan uses activity based costing to calculate product cost
The following table summarizes the plant's overhead for the year and the cost drivers
used for each activity center.
		Total Cost				Amount of		Activity Cost Per
Activity Center		(Million of Dollars)		Cost Driver		Cost Driver		Unit of Cost Driver
Material handling		20.8		Direct Materials		$130 million		0.16
Purchasing		13.8		Part numbers		800		17,250
Set up Labor		6.8		Batches		500		13,600
Engineering		10.9		Number of Products		125		87,200
Occupancy		16.2		Direct Labor		90 million		0.18
Total Plant overhead		68.5
One Faucet model Wiremold manufactures is Xcarlet. Its total product cost is as follows
			Amount of Cost		Activity Cost Per
			Driver		Unit of Cost Driver			Total Cost
Direct labor								$121,700
Direct Material								90500
Material handling			$90,500		$0.16			14480
Purchasing			9		17,250			155,250
Set up			8		13,600			108,800
Engineering			1		87,200			87,200
Occupancy			121700		0.18			21,906
Total Cost								$599,836
Number of units manufactures								12500
Product cost Per unit								47.99
1) Calculate the product cost per unit of Xcarlet fauce using absorption costing where plant overhead
is assigned to products using Direct material dollars.
2) As a manager of the divison, would you prefer ABC or the traidition method ( absorption costing )