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For many years, Yelena Company manufactured a single product called a Mono-Relay. Then three years ago, the company automated a portion of its plant and at the same time introduced a second product called a Bi-Relay that has become increasingly popular. The Bi-Relay is a more complex product, requiring 1.00 hour of direct labor time per unit to manufacture and extensive machining in the automated portion of the plant. The Mono-Relay requires only 0.50 hour of direct labor time per unit and only a small amount of machining. Manufacturing overhead costs are currently assigned to products on the basis of direct labor-hours.

Despite the growing popularity of the companys new Bi-Relay, profits have been declining steadily. Management is beginning to believe that there may be a problem with the companys costing system. Materials and labor costs per unit are given below:

	Mono-Relay			Bi-Relay
Direct materials	$	58.00		$	73.00
Direct labor (0.50 hour and 1.00 hour @ $13.00 per hour)	$	6.50		$	13.00

Management estimates that the company will incur $689,280 in manufacturing overhead costs during the current year and 18,000 units of the Mono-Relay and 7,000 units of the Bi-Relay will be produced and sold.

Management is considering using activity-based costing to apply manufacturing overhead cost to products for external financial reports. The activity-based costing system would have the following four activity cost pools:

Activity Cost Pool	Activity Measure	Estimated Overhead Cost
Maintaining parts inventory	Number of part types	$	108,480
Processing purchase orders	Number of purchase orders		212,000
Quality control	Number of tests run		304,120
Machine related	Machine-hours		64,680
		$	689,280

	Expected Activity
Activity Measure	Mono-Relay	Bi-Relay	Total
Number of part types	528	828	1,356
Number of purchase orders	3,228	1,012	4,240
Number of tests run	5,628	9,578	15,206
Machine-hours	1,028	1,128	2,156

Determine the activity rate for each of the four activity cost pools.

Using the activity rates you computed in part (2) above, do the following:

a.	Determine the per unit amount of manufacturing overhead cost that would be assigned to each product using the activity-based costing system. (Round your final answers to 2 decimal places.)

b.	Compute the unit product cost of each product. (Do not round intermediate calculations. Round your final answers to 2 decimal places.)

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