Ramsey Company produces speakers (Model A and Model B). Both products pass through two producing departments. Model A's production is much more labor intensive than that of Model B. Model B is also the more popular of the two speakers. The following data have been gathered for the two products:

Required:
1. Compute the overhead cost per unit for each product by using a plantwide rate based on direct labor hours. Round to two decimal places.
2. Compute the overhead cost per unit for each product by using ABC. Round to two decimal places.
3. Suppose that Ramsey decides to use departmental overhead rates. There are two departments: Department 1 (machine intensive) with a rate of $2.33 per machine hour and Department 2 (labor intensive) with a rate of $0.60 per direct labor hour. The consumption of these two drivers is as follows:

Compute the overhead cost per unit for each product by using departmental rates. Round to two decimal places.
4. Using the activity-based product costs as the standard, comment on the ability of departmental rates to improve the accuracy of product costing. (Did the departmental rates do better than the plantwiderate?)

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Product Data Model A Model B Units produced per year Prime costs Direct labor hours Machine hours Production runs Inspection hours Maintenance hours Overhead costs 30,000 $100,000 140,000 20,000 40 800 10,000 300,000 $1,000,000 300,000 200,000 60 1,200 90,000 Setup costs Inspection costs Machining Maintenance Total $180,000 140,000 160,000 180,000 $660,000 Department 1 Machine Hours 10,000 170,000 Department 2 Direct Labor Hours 30,000 270,000 Model A Model B