Klein Company produces three types of bird feeders: Basic, Squirrel-Proof, and Deluxe. Currently, the company allocates overhead to products using machine-hours. This year, the company produced 1,000 Basic models, 2,000 Squirrel-Proof models, and 1,800 Deluxe models. Details for each product at the end of the current year are as follows:

The total overhead cost to be allocated to products is $28,000.

Required:

1. Calculate the profit per unit for each product after allocated overhead costs using machine-hours.
2. Use the activity-based information below to reallocate overhead costs to products. Compare product profitability under the two different overhead allocation methods.

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Revenue.... Direct materials... Direct labour... Machine-hours per unit.. Basic $30,000 $12,000 $ 7,500 0.3 MH Squirrel-Proof $110,000 $ 50,000 $ 19,000 0.5 MH Deluxe $117,000 $ 54,000 $ 22,500 0.4 MH