Exercise 2A-3 Activity-Based Absorption Costing as an Alternative to Traditional Product Costing [LO2- 51 Stillicum Corporation makes ultra light-weight backpacking tents. Data concerning the company's two product lines appear below: $ $ Direct materials per unit Direct labor per unit Direct labor-hours per unit Estimated annual production Deluxe 54.00 12.00 0.70 DLHS 10,000 units Standard $ 42.00 $ 10.00 1.40 DLHS 50,000 units The company has a traditional costing system in which manufacturing overhead is applied to units based on direct labor-hours. Data concerning manufacturing overhead and direct labor-hours for the upcoming year appear below: Estimated total manufacturing overhead Estimated total direct labor-hours $530,000 77,000 DLHS Required: 1. Determine the unit product costs of the Deluxe and Standard products under the company's traditional costing system. 2. The company is considering replacing its traditional costing system with an activity-based absorption costing system that would have the following three activity cost pools: Expected Activity Activity Cost Pools and Activity Measures Supporting direct labor (direct labor-hours) Batch setups (setups) Safety testing (tests) Total manufacturing overhead cost Estimated Overhead Cost $ 385,000 90,000 55,000 $ 530,000 Deluxe 7,000 200 30 Standard 70,000 100 Total 77,000 300 100 70