company produces camping equipment: tents, sleeping bags, andtarps. They are implementing a new accounting software and want totake the opportunity to implement activity based costing for theirproducts. For the upcoming year, they expect to produce and sell300,000 sleeping bags, 200,000 tents and 150,000 tarps.

Because the employees in HR, Engineering and Facilities aresalaried, and because the Building Rent and Machine depreciationare in the Facilities department, the Human Resources, FacilitiesMaintenance, and Engineering and Quality Departments are consideredto be all Fixed Costs. The production departments include costs forhourly workers, spare parts, and utilities, therefore, theFabrication and Assembly Production Departments are considered tobe all Variable Costs.

The departments, costs and other related information are asfollows:

	Department	Annual Budget Direct exp		Cost Driver		Headcount	Square feet
	Human Resources Department	$                                300,000.00		Headcount
	Facilities Maintenance Department	$                             1,500,000.00		Square Feet		10
	Engineering and Quality Department	$                                400,000.00		Square Feet		5
	Fabrication Produciton Departement	$                             1,800,000.00		Machine hours		20	40,000
	Assembly Produciton Department	$                             1,200,000.00		Man Labor hours		15	60,000
The hour in production arebudgeted as follows:
	Product Line	Fabrication Time		Assembly time
	Sleeping Bags	4,160		Machine hours		49,920	Man labor hours
	Tents	4,160		Machine hours		37,440	Man labor hours
	Tarps	2,080		Machine hours		6,240	Man labor hours
The Raw Material costs andusage is as follows:
	Raw Materials	Cost		Unit
	Nylon	$                                            2.50		Square yard
	Carbon Fiber	$                                            8.00		per kg
	Polyfill	$                                            1.00		per kg
	Raw Material usage	Nylon		Carbon Fiber		Polyfill
	Sleeping Bags	6.0	sq yd	0	kg	1.5	kg
	Tents	10.0	sq yd	2.5	kg	0	kg
	Tarps	8.0	sq yd	0.5	kg	0	kg

Current Sales Prices are $60 each for Sleeping Bags, $120 eachfor Tents, and $35 each for Tarps.

Your company wants to determine standard costs as well asunderstand the drivers for their costs. You have been requested tocomplete the following calculations. Each calculation should showthe fixed cost, variable cost and total cost.

Using the step-down method, allocate costs from the supportdepartments to the production departments.

Calculate the Hourly Operating Rate for each productiondepartment, and calculate the annual production costs for eachproduct line.

Calculate the Standard Cost per unit for each Product type.

Calculate the Contribution Margin per unit, Standard GrossProfit per unit, Gross Margin Percentage and Total annual grossprofit for each Product type.