Please help me answer this question based on the information provided below: "Of the three costing systems discussed in this case, which do you recommend Caress of Steel adopt and why? Please describe in a clear concise paragraph. Note that this question represents almost one-third of the score for this case. Please take care in your discussion."

1. What is the total overhead that is allocated to products? Recall that "Caress of Steel includes the Set-up labor cost as overhead which is then added to the other manufacturing overhead shown in Exhibit 2." (Please provide your answer as a number only (do not include $). Total Setup-Labor Costs: 300 hours x $16 = $4,800 $680,000 + $4,800 = $684,800

2. What is the overhead rate used to measure the gross margin in Exhibit 1? Recall that, Caress of Steel Machining "allocates overhead to production on the basis of direct labor cost." Please only provide a number and round to the second decimal. e.g. $5.6836/Direct Labor Hour should just be 5.68 Total Direct Labor Costs: 40,500 hours x $16 = $648,000 $684,800 / $648,000 = $1.06

3. Peart proposed a revised cost system where they first identify material-related overhead (the cost of receiving and handling material), and allocate that cost to each product line based on the cost of material. Second, he suggested that they measure set-up labor, remove it from total overhead, and assign it to each product line. Finally, he suggested that they substitute machine hours for labor dollars as the basis for allocating the remaining factory overhead. What is the material-related overhead rate under this system? Please only provide a number and round to the second decimal. e.g. $5.6836/Direct Labor Hour should just be 5.68. $220,000 / $185,000 = $1.19

4. Peart proposed a revised cost system where they first identify material-related overhead (the cost of receiving and handling material), and allocate that cost to each product line based on the cost of material. Second, he suggested that they measure set-up labor, remove it from total overhead, and assign it to each product line. Finally, he suggested that they substitute machine hours for labor dollars as the basis for allocating the remaining factory overhead. What is the "remaining factory overhead" rate under this system? Please only provide a number and round to the second decimal. e.g. $5.6836/Direct Labor Hour should just be 5.68. $460,000 / 9,000 hours = $51.11

5. Peart proposed a revised cost system where they first identify material-related overhead (the cost of receiving and handling material), and allocate that cost to each product line based on the cost of material. Second, he suggested that they measure set-up labor, remove it from total overhead, and assign it to each product line. Finally, he suggested that they substitute machine hours for labor dollars as the basis for allocating the remaining factory What is the total cost to produce a "Guitar" under this system? Please only provide a number and round to the second decimal. e.g. $5.6836/unit should just be 5.68. DM Costs: $210 x 300 units = $63,000 Setup Costs: 10 hours x 1 Prod Run x $16 = $160 DL Costs: 25 hrs x 300 units x $16 = $120,000 Total Machine Hours: 10 hrs x 300 units = 3,000 machine hours Total Allocated OH: 3,000 hrs x $51.11 = $153,330 Total Production Costs: $63,000 + $160 + $120,000 + $153,330 = $336,490 $336,490 / 300 units = $1,121.63

6. Alex suggested an alternative method where they allocate overhead costs as a function of transactions. Based on the data provided in Exhibit 3, and the suggestion to "allocate overhead costs as a function of transactions related to each overhead cost," what is the cost of Receiving per transaction? Please only provide a number and round to the second decimal. e.g. $5.6836/Direct Labor Hour should just be 5.68. $20,000 / 387 Transactions = $51.68

7. Alex suggested an alternative method where they allocate overhead costs as a function of transactions. They could then allocate costs unrelated to transactions like Engineering based on the engineering workload, and maintenance and depreciation based on machine hours. Based on the data provided in Exhibit 3, what is the cost of Maintenance and Depreciation per machine hour? Please only provide a number and round to the second decimal. e.g. $5.6836/Direct Labor Hour should just be 5.68. $270,000 / 9,000 Hours = $30

8. What is the total cost per unit of Drum Kits under the costing system suggested by Alex? Please submit your answer as a number, for example, $5/unit = 5.00. DM: $310 x 200 units = $62,000 Setup Costs: 24 hrs x 10 runs x $16 = $3,840 DL: 40 hrs x 200 units x $16 = $128,000 Receiving: 300 x $51.68 = $15,504 Materials Handling: 300 x $516.80 = $155,040 Packing/Shipping: 66 x $666.67 = $44,000.22 Engineering: $100,000 x 50% = $50,000 Maintenance/Dep: 1,000 x $30 = $30,000 Total Production Costs: $488,384.22 Total cost per unit: $488,384.22 / 200 units = $2,441.92