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Cost Information From Instructions
	Stick	Collapsible
Units Sold	60,000	3,000
Selling Price	$12.50	$14.00
Direct Material Cost Per Unit	$3.00	$3.10
Direct Labor Cost Per Hour	$7.50	$8.00
Variable MO	$0.40	$0.40
Variable Selling Costs	$1.10	$1.10
Labor Hours Per Unit	0.2	0.2
Sales Orders	120	1
Purchase Orders	50	3
Production Runs	45	6
Material Moves	86	10
Machine Setups	130	6
Machine Hours	525	32
Inspections	200	10
Shipments	60	3
Activity Information from Instructions
Activity	Activity Cost	Activity Cost Driver
Order Processing	$35,000	Number of Sales Orders
Purchasing	$36,000	Number of Purchase Orders
Material Handing	$28,000	Material Moves
Machine Setup	$14,000	Machine Setups
Production	$99,000	Production Runs
Assembly	$80,000	Machine Hours
Inspecting	$11,000	Number of Inspections
Shipping	$7,500	Number of Shipments
Requirement 1
Activity	Total Costs	Quantity of Cost Allocation Base	Overhead Allocation Rate
Order Processing	$35,000	121	$289
Purchasing	$36,000	53	$679
Material Handing	$28,000	96	$292
Machine Setup	$14,000	136	$103
Production	$99,000	51	$1,941
Assembly	$80,000	557	$144
Inspecting	$11,000	210	$52
Shipping	$7,500	63	$119
Requirement 2
Traditional Costing
	Stick Umbrella	Collapsible Umbrella	Total
Revenues	$750,000	$42,000	$792,000
Direct Materials	$180,000	$9,300	$189,300
Direct Labor	$450,000	$24,000	$474,000
Variable Overhead	$24,000	$1,200	$25,200
Variable Selling Costs	$66,000	$3,300	$69,300
Allocated Fixed Overhead	$295,714	$14,786	$310,500
Total Costs	$1,015,714	$52,586	$1,068,300
Operating Income	-$265,714	-$10,586	-$276,300
Operating Income %	-35%	-25%	-35%
Per Unit Operating Income	-$4.43	-$3.53	-$7.96
Requirement 3
Activity-Based Costing
	Stick Umbrella	Collapsible Umbrella	Total
Revenues	$750,000	$42,000	$792,000
Direct Materials	$180,000	$9,300	$189,300
Direct Labor	$450,000	$24,000	$474,000
Variable Overhead	$24,000	$1,200	$25,200
Variable Selling Costs	$66,000	$3,300	$69,300
Order Processing Costs	$34,711	$289	$35,000
Purchasing Costs	$33,962	$2,038	$36,000
Material Handing Costs	$25,083	$2,917	$28,000
Machine Setup Costs	$13,382	$618	$14,000
Production Costs	$87,353	$11,647	$99,000
Assembly Costs	$75,404	$4,596	$80,000
Inspecting Costs	$10,476	$524	$11,000
Shipping Costs	$7,143	$357	$7,500
Total Costs	$1,007,515	$60,785	$1,068,300
Operating Income	-$257,515	-$18,785	-$276,300
Operating Income %	-34%	-45%	-35%
Per Unit Operating Income	-$4.29	-$6.26	-10.5536996281139
Requirement 4
Costs per Unit	Stick Umbrella	Collapsible Umbrella
Traditional	$16.93	$17.53
ABC	$16.79	$20.26
Difference	$0.14	-$2.73
Requirement 5
ABC is a better method of cost allocation as it helps in proer allocation of the cost as per the use of the fixed overhead cost for a particular product Based on this data, how to make memo to management.... Memo to Management Your memo to management should serve as a summary of your quantitative analysis, reviewing the key points and recommendations that you feel management should be aware of. A. Describe the overall findings of your analysis, including key elements that management should be aware of. B. Make a recommendation to management based on your cost accounting analysis that will enhance business planning. C. Recommend a performance tool to management based on your cost accounting analysis that will improve business operations.

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