"Tres bikes" manufactures and sells three styles of e-bikes brakes: Bone, Clan, and War. Production takes 25, 25, and 10 machine hours to manufacture 1,000-unit batches of bone, clan, and war bike breaks, respectively. The following additional data apply:

BoneClanWar

Projected sales inunits30,00050,00040,000

PER UNIT data:

Selling price$40$20$30

Direct materials$8$4$8

Direct labor$15$3$9

Overhead cost based on direct labor hours

(traditionalsystem)$12$3$9

Hours per 1000-unit batch:

Direct laborhours401030

Machinehours252510

Setup hours1.00.51.0

Inspectionhours302020

Total overhead costs and activity levels for the year are estimated as follows:

ActivityOverhead costsActivity levels

Directlaborhours2,900hours

Machinehours2,400hours

Setups$465,50095setup hours

Inspections$405,0002,700inspection hours

$870,500

Required:

a.Usingthe traditional system, determine the operating profit per unit for each type of e-bike break.

b.Determinethe activity-cost-driver rate for setup costs and inspection costs.

c.Usingthe ABC system, for each e-bike break type:

1.computethe estimated overhead costs per unit.

2.computethe estimated operating profit per unit.