Hakara company has been using direct labor costs as the basis for assigning overhead to its many products. under this allocation system, product a has been assigned overhead of $10.80 per unit, while product b has been assigned $3.60 per unit. management feels that an abc system will provide a more accurate allocation of the overhead costs and has collected the following cost pool and cost driver information:

cost pools activity costs cost driver driver consumption

machine setup $ 360,000

setup hours 4,000

materials handling 100,000

pounds of materials 20,000

electric power 40,000

kilowatt-hours 40,000

the following cost information pertains to the production of a and b, just two of its many products:

a b

number of units produced 4,000 20,000

direct materials cost $ 42,000 $ 54,000

direct labor cost $ 24,000 $ 40,000

number of setup hours 400 200

pounds of materials used 1,000 3,000

kilowatt-hours 2,000 4,000

required: 1. use activity-based costing to determine a unit cost for each product.