Shauton Company produces two products, Fancy and Plain, and uses a costing system in which all overhead is accumulated in a single cost pool and allocated based on direct labor hours. Shauton's management has decided to implement ABC, because a cost study has revealed significant amounts of overhead cost related to setup activity and design activity. The number of setups and the number of design hours will be the activity drivers for the two new cost pools, and direct labor hours will continue as the base for allocating all remaining overhead. Selected information for Shauton Company's most recent year of operations is as follows:

Required:
(1) Calculate the total and per-unit costs reported for the two products by the existing costing, system, using the format shown in Exhibit 14-3.
(2) Calculate the total and per-unit costs reported for the products by the ABC system, using the format shown in Exhibit 14-4.
(3) Reconcile the costs reported for Fancy by the two costing systems. Use columns for total and per-unit costs.
(4) What percentage of total overhead is treated differently by the two costing systems? By what percentage did the cost of Fancy change as a result of the change in the system? Calculate each answer to the nearest whole percent.

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Fancy 6 Units produced Direct material cost: 10 $60,000 $160,000 $ 300 220,000 Direct labor $28,000 $272,000 300,000 Setups Design hours 5 Setup related Design related 2 825,000 1.200 Total overhead