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All-Things Manufacturing produces two types of entry doors: Premier and Basic. The assignment basis for support costs has been direct labor dollars. For 2011, All-Things compiled the following data for two products:

	Premier	Basic
Sales units	50,000	400,000
Sales price per unit	$650.00	$475.00
Direct materials and labor costs per unit	$180.00	$130.00
Indirect costs per unit	$80.00	$120.00

Last year, All-Things Manufacturing purchased an expensive robotics system to allow for more decorative door products in the deluxe product line. The CFO suggested that an ABC analysis could be valuable to help evaluate a product mix and promotion strategy for the next sales campaign. She obtained the following ABC information for 2011:

Activity	Cost Driver	Cost	Total	Deluxe	Standard
Setups	of set ups	$500,000	500	400	100
Machine-related	of machine hours	$44,000,000	600,000	300,000	300,000
Packing	of shipments	$5,000,000	250,000	50,000	200,000

Required:

Using the current system,

What is the profit per unit for each door?

Using Excel, prepare product line and total company income statements.

Using the activity-based costing data presented above,

Compute the cost-driver rate for each overhead activity.

Compute the revised profit per unit for each door

Using Excel, prepare product line and total company income statements using the revised overhead allocations rates.

Is the Premier door as profitable as the original data estimate?

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