Potvin Company produces mathematical and financial calculators and operates at capacity. Data related to the two products are presented here:

Total manufacturing overhead costs are as follows.
________________________________ Total
Machining costs ...................... $350,000
Setup costs .............................. 117,000
Inspection costs ......................... 96,000
1. Choose a cost driver for each overhead cost pool and calculate the manufacturing overhead cost per unit for each product.
2. Compute the manufacturing cost per unit for each product.
3. How might Potvin use the new cost information from its activity-based costing system to better manage its business?

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Mathematical 25,000 Financial 50,000 Annual production in units Direct material costs Direct manufacturing labor costs Direct manufacturing labor-hours $125,000 $62,500 $ 50,000 2,500 50,000 50 $25,000 1,250 20,000 50 Machine-hours Number of production runs Inspection hours 400 800