Platt Sports Products manufactures and distributes three types of golf clubs: beginners, intermediate, and advanced. The materials used in these clubs increases in each level and allows for more precise balancing and longer wear. Production is highly automated for the beginners' clubs, whereas the intermediate and advanced clubs require a varying degree of labor, depending on the intricacy of the balancing process. Platt applies all indirect costs according to a predetermined rate based on direct labor hours. A consultant recently suggested that Platt switch to an activity-based costing (ABC) system, and identified the following cost breakdown for the upcoming year:

In addition, management estimates 50,000 direct labor hours will be used in the upcoming year at a rate of $14 per hour.
Assume that the following activity took place in the first month of the upcoming year:

Required:
a. Compute the production costs for each product in the first month of the upcoming year using direct labor hours as the allocation base.
b. Compute the production costs for each product in the first month of the upcoming year using machine hours as the allocation base.
c. Compute the production costs for each product in the first month of the upcoming year using activity based costing.

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Recommended cost driver number of order number of production runs pounds of material used machine hours number of inspection number of units Cost driver 125 orders Costs Activity Order processing Production setup Materials handling $ 52,500 210,000 375,000 75 runs 125,000 lbs 20,000 hours 40 inspections 280,000 units Machinery depr & maint Quality control 322,000 80,000 14,000 Packing Beginners Intermediate Advanced Number of units produced 20,000 8,000 3,000 Direct material costs $20,800 $13,000 $8,000 Direct labor hours 500 1,000 2,000 Number of orders 6 3 Number of production runs 2 3 Pounds of material 8,000 3,200 1,500 Machine hours 1,200 300 200 Number of inspections 3 3 Number of units şlupped 18,000 7,500 2,500