Compute revised product costs for RC1 and RC2.

Why did the product costs change?     

Exhibit 1 BREEDEN SECURITY, INC. (B) 2008 Monthly Budget Sales Revenue Produce and sell per month Projected selling price Sales revenue Manufacturing Costs Parts Direct labor Overhead (a) Total manufacturing cost Manufacturing cost per unit Selling and administrative Total expense Profit RC1 10,000 units $ 20.00 $200,000 $55,000 35,000 70,000 $160,000 16.00 (a) Manufacturing overhead: Supplies Occupancy (utilities, rent, maintenance) Equipment maintenance Equipment depreciation RC2 5,000 units $23.00 $115,000 $21,000 15,000 17,000 8,000 Quality control and production engineering 15,000 Manufacturing administration 36,000 $112,000 Total manufacturing overhead $32,000 21,000 42,000 $95,000 19.00 Total $315,000 $87,000 56,000 112,000 $255,000 40,000 $295,000 $20,000 In this budget, overhead was allocated to the two products on the basis of direct labor estimated for the two products: $2.00 of overhead for each $1.00 of direct labor.