Units produced

$41,000$

Direct labor$-$hours used

$123,000$

$13,000$

$54,000$

Machine$-$hours used

$20,500$

$22,500$

$145,500$

Direct materials costs

$ $3,097,000$

$22,500$

$43,000$

Direct labor costs

$2,520,000$

Ultra

$ $3,700,000$

$ $6,797,000$

$855,000$

Total

$3,375,000$

The planning process team at Hall, Incorporated has estimated the following manufacturing overhead costs for the next fiscal year:

Account

Amount

Administration

$ $825,400$

Engineering

$3,603,000$

Machine operation and maintenance

$840,000$

Miscellaneous

$540,100$

Supervision

$884,500$

Total

$ $6,693,000$

The cost accounting system at Hall, Incorporated calculates product costs by adding allocated overhead to the direct costs of the product. Overhead costs are allocated based on direct labor$-$hours.

Required:

a$.$ Compute the estimated per unit product costs for the next fiscal year, based on the current cost accounting system.

b$.$ An analyst on the planning process team suggests that a two$-$stage system would improve the estimated product costs. The analyst suggests that overhead be first assigned to on one of two cost pools: Machine related and labor related. Machine$-$related overhead consists of the accounts "Engineering" and "Machine operation and maintenance." Labor$-$related overhead consists of the remaining man$$facturing overhead. Machine$-$related costs would be allocated based on machine$-$hours. Labor$-$related overhead would be allocated based on direct labor cost. Compute the estimated per unit product costs for the next fiscal year, based on the