Exam Manufacturing has five activity cost pools and two products (a budget type vacuum and a deluxe type vacuum). Information is presented below:

Required:

A) Compute the overhead cost per unit using a single plant wide overhead rate, assuming total overhead is allocated based on machine hours.

B) Compute the overhead cost per unit for each product where overhead costs are allocated using activity based costing. Round your answer to the nearest cent.

C) Comment on the cost differences between the two costing systems in A) and B).

D) How might management use the activity based costing information to make better decisions?

Budget Deluxe Production Quantity Current Selling Price Direct Materials Cost Direct Labour Cost$11,400,000| $10,600,000 700,000 $40 $4,000,000 $5,400,000 300,000 $80 Cost Drivers by Product Cost Driver Orders Est. Variable OH Est. Fixed OH Total Est. Overhead $200,000 $300,000 $1,200,000 $2,000,000 $300,000 $4,000,000 Budget Deluxe $100,000 $100,000 1200 800 Setups Machine hours $300,000 $1,200,000 $0 300 700 240,000 800,000 $0 160,000 1,200,000 $2,000,000 $0 Parts $0 $300,000 $400,000 Inspections 600 400 $3,600,000 Budget Deluxe Production Quantity Current Selling Price Direct Materials Cost Direct Labour Cost$11,400,000| $10,600,000 700,000 $40 $4,000,000 $5,400,000 300,000 $80 Cost Drivers by Product Cost Driver Orders Est. Variable OH Est. Fixed OH Total Est. Overhead $200,000 $300,000 $1,200,000 $2,000,000 $300,000 $4,000,000 Budget Deluxe $100,000 $100,000 1200 800 Setups Machine hours $300,000 $1,200,000 $0 300 700 240,000 800,000 $0 160,000 1,200,000 $2,000,000 $0 Parts $0 $300,000 $400,000 Inspections 600 400 $3,600,000