costing be applied Cases LO 6 8-45 Environmental costs, activity-based costing Bevans Co. makes two products, Product X and Product Y. Bevans has produced Product X for many years without generating any hazardous wastes. Recently, Bevans developed Product Y, which is superior to Product X in many respects. However, production of Product Y generates hazardous wastes. Because of the hazardous wastes, Bevans now must deal with hazardous waste disposal, governmental environmental re- ports and inspections, and safe handling procedures. Bevans Co. uses an indirect cost rate based on machine hours to assign manufacturing support costs to its two products. Because of concerns about the accuracy of the product costing system, Joel Dempsey, the controller, undertook an activity-based costing analysis of the manufacturing support costs, including an analysis of the support costs related to Product Y's generation of hazardous wastes. The resulting cost information, as well as machine hours and number of units, is summa- rized in the following table: Direct costs (material plus labor) Environmental support costs Nonenvironmental support costs Total machine hours Number of units 59,900,000 $14000,000 $14,000,000 22,000,000 6000,000 $29,000,000 40,000,000 Required (a) Compute product costs per ui for Products X and Y using the current indirect cost rate based on machine hours for manufacturing support costs. (b) Compute product costs per unit for Products X and Y using the activity-based costing figures provided in the table. 334 Chapter 8 Measuring and Managing Life-Cycle Costs 11:00 PM /1/2019 22