Exercise 17-17 (Algo) Using activity-based costing to allocate overhead, compute product cost and gross profit LO P3 Ice Cool produces two different models of air conditioners. The activities, costs, and cost drivers associated with the production processes follow. Process Assembly Activity Machining Setups Finishing Support Budgeted Cost $ 310,000 24,000 $ 334,000 Inspecting $ 224,000 Purchasing $ 134,000 Budgeted Activity Activity Cost Driver Machine hours (MH) Usage 7,600 Setups 60 Inspections 780 Purchase orders 450 Additional production information concerning its two models follows. Units and Activities Units produced Machine hours Setups Inspections Purchase orders Per Unit Model X Model Z 1,400 2,800 2,400 5,200 20 40 500 280 300 150 Model X Model Z $ 400 155 $ 380 110 125 120 Selling price per unit Direct materials cost per unit Direct labor cost per unit 1. Compute the activity rate for each activity using activity-based costing. 2. Using activity-based costing, compute the overhead cost per unit for each model. 3. Compute the total product cost per unit for each model. 4. For each model, compute the gross profit per unit (selling price per unit minus product cost per unit).