Problem 1 20 points Caine Cellular Company produces a line o

Problem 1 (20 points) Caine Cellular Company produces a line of cellular telephones. A company has placed an order for 800 cellular phones, and the order has just been completed. Caine has just recently changed to an activity based costing system. The controller is interested in doing a comparison of the new costing system with the old traditional costing system. The order had the following direct costs of production CAINE CELLULAR COMPANY DIRECT COSTS OF PRODUCTION FOR 800 PHONE ORDER Direct materials Direct labor houns Av 60,000 250 15.00 rate per direct labor hour Under traditional costing, the company applied manufacturing overhead at a rate of 270% of direct labor cost. Under activity based costing, the company has determined the following information. CAINE CELLULAR COMPANY MOH INFORMATION FOR ACTIVITY BASED COSTING FOR 800 PHONE ORDER Units of Cost Driver For Order Activity Cost Driver ctivity Cost Rate Electrical engineering design Setup Parts production Product testing Packaging Engineering hours 19 per eng Number of setups Machine hours Number of tests Number of packages hour 32 eng. hours setups $26 per mach. hour134 mach. hours tests kage 22 packages per setup S32 S17 per pack per test52

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Total Cost	$73,875
Cost per unit	$92.34