Answer Happy

Utica Manufacturing (UM) was recently acquired by MegaMachines,
Inc. (MM), and organized as a separate division within the company.
Most manufacturing plants at MM use an ABC system, but UM has
always used a traditional product costing system. Bob Miller, the
plant controller at UM, has decided to experiment with ABC and has
asked you to help develop a simple ABC system that would help him
decide if it was useful. The controller’s staff has identified
costs for the first month in the four overhead cost pools along
with appropriate cost drivers for each pool.
The company manufactures two basic products with model numbers 308
and 510. The following are data for production for the first month
as part of MM.
Required:
a. The current cost accounting system
charges overhead to products based on machine-hours. What unit
product costs will be reported for the two products if the current
cost system continues to be used?
b. A consulting firm has recommended using an
activity-based costing system, with the activities based on the
cost pools identified by the cost accountant. What are the cost
driver rates for the four cost pools identified by the cost
accountant?
c. What unit product costs will be reported
for the two products if the ABC system suggested by the cost
accountant’s classification of cost pools is used?
d. If management should decide to implement
an activity-based costing system, what benefits should it
expect?