Yahama Ltd makes several spare parts for motorbikes including Suzuka and Yahama parts. The company has recently switched from the traditional absorption costing to the activity-based costing system. 

The following details relate to the manufacturing of the Suzuka and Yahama spare parts for the last accounting year:

For all output manufactured by Yahama Ltd during the last financial year, the annual estimated production activity, cost pools, and cost driver activity levels are:

Required

1. Calculate the overhead rates using activity-based costing for purchases, storage, setups, and machine runs.
2. Calculate the unit costs for Suzuka and Yahama spare parts including the direct costs and allocated overheads.
3. Comment on the activities that have the highest cost driver rates and any alternatives for reducing such costs.

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Units produced Purchase orders Storage Machine setups Machine-hours Direct materials Direct labor Variable overheads Suzuka 4,000 400 200 50 10,000 ¥10,000 ¥30,000 ¥5,000 Yahama 2,000 500 250 20 4,000 ¥ 8,000 ¥40,000 ¥ 2,000