Rachel’s Costume Creations has two product lines: machine-made costumes and hand-made costumes. The company assigns $96,000 in manufacturing overhead costs to two cost pools: power costs and inspection costs. Of this amount, the power cost pool has been assigned $38,400 and the inspection cost pool has been assigned $57,600. Additional information about each product line is provided below.

a. Allocate the manufacturing overhead from the activity cost pools to each product line. Use what you believe are the most significant cost drivers from the information provided.
b. Compute the cost per unit of machine-made costumes and hand-made costumes.
c. Compute the profitability per unit of each product line.

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Sales revenue. Direct labor and materials costs Units produced and sold ... Machine-hours Square feet of production space Material orders received ... Quality control inspection hours Machine-Made Hand-Made $360,416 $199,584 $144,000 $120,000 66,736 16,632 120,000 5,000 1,500 1,000 180 125 2,500 625