Chapter 5, Problem 5.23E

ABC, process costing. Sander Company produces mathematical and financial calculators and operates at capacity. Data related to the two products are presented here:

	Mathematical	Financial
Annual production in units	45,000	90,000
Direct material costs	$180,000	$360,000
Direct manufacturing labor costs	$ 90,000	$180,000
Direct manufacturing labor-hours	4,500	9,000
Machine-hours	30,000	60,000
Number of production runs	45	45
Inspection hours	1,200	600

Total manufacturing overhead costs are as follows:

	Total
Machining costs	$360,000
Setup costs	108,000
Inspection costs	117,000

1. 1. Choose a cost driver for each overhead cost pool and calculate the manufacturing overhead cost per unit for each product.

Required

1. 2. Compute the manufacturing cost per unit for each product.
2. 3. How might Sander’s managers use the new cost information from its activity-based costing system to better manage its business?