A manufacturer makes two types of snowmobiles, Basic and Deluxe, and reports the following data. The company budgets production of 6,000 Basic snowmobiles and 2,000 Deluxe snowmobiles.

1. Compute an overhead activity rate for each activity using activity based costing (ABC).
2. Compute the overhead cost per unit for each of the two product lines using \(A B C\).

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Activity Budgeted Cost Machine setup........ $ 150,000 Materials handling.. 250,000 Machine depreciation... 720,000 Total....... $1,120,000 Activity Cost Driver Budgeted Activity Usage Basic Setups 200 setups Parts 60,000 parts 6,000 MH 500 setups 100,000 parts Activity Usage Deluxe Machine hours (MH) 9,000 MH 300 setups 40,000 parts 3,000 MH