OBJECTIVE 2 EXCEL Problem 4-28 Unit-Based versus Activity-Based Costing Fisico Company produces exercise bikes. One of its plants produces two versions: a standard model and a deluxe model. The deluxe model has a wider and sturdier base and a variety of elec tronic gadgets to help the exerciser monitor heartbeat, calories burned, distance traveled, et At the beginning of the year, the following data were prepared for this plant: Expected quantity Selling price Prime costs Machine hours Chapter 4 Activity-Based Costing Standard Model Deluxe Model 15,000 30,000 $370 $700 $4.5 million $5.25 million 37,500 37,500 Direct labor hours 75,000 75,000 Engineering support (hours) 13,500 31,500 Receiving (orders processed) 3,000 4,500 Materials handling (number of moves) 15,000 45,000 Purchasing (number of requisitions) 750 1,500 Maintenance (hours used) 6,000 24,000 Paying suppliers (invoices processed) 3,750 Setting up batches (number of setups) 60 3,750 540 Additionally, the following overhead activity costs are reported: $ 600,000 Maintenance Engineering support Materials handling Setups Purchasing Receiving Paying suppliers 900,000 1,200,000 750,000 450,000 300,000 300,000 $4,500,000 Required: 1. Calculate the cost per unit for each product using direct labor hours to assign all overhead costs. 2. Calculate activity rates and determine the cost per unit. Compare these costs with those calculated using the unit-based method. Which cost is the most accurate? Explain.