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1. What is the number of production runs for each type of product?

Number of production runs:

Standard Custom Total

2. What is the hourly wage rate (DL) for each type of product?

Hourly wage:

Standard Custom

3. Calculate the cost per unit of cost driver for each of the OH cost categories shown below.

Activity	Cost per unit of cost driver
Production Scheduling
Machine setup/changeover
Lease for manufacturing facility

ABC Company produces two types of products: standard and custom. The company's cost system consists of two direct costs (DM and DL) and one indirect cost pool which is allocated on the basis of DL dollars. The owners of the company have become concerned about a decline in profit margins for their standard product line. Production data for 2011 is provided below. Standard Custom Total Number of units sold and manufactured 8,000 1,100 9,100 Revenue (total $$) $4,952,000 $965,800 $5,917,800 DM (total $$) $3,256,000 $761,200 $4,017,200 DL (total $5) $640,000 $183,700 $823,700 Total DL hours 31,210 25,600 25 5,610 11 Average batch size 36 Number setup hours per production run % of manufacturing space used 52.0% 48.0% 72,000 Indirect labor for production planning and machine setup (foed) $300,000 Lease for manufacturing facility $495,000 The president that would be me) has heard about ABC and wants you to analyze profitability under such a cost system. You find that OH consists of indirect labor" which is responsible for production scheduling and machine setup/changeover. You survey the people involved and obtain the following information about how they spend their time. % of time cost cost driver Production scheduling 40% #production runs Machine setup/changeover #setup hours

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