Problem 5-49 Activity-Based Costing; Product Promotion (LO 5-1, 5-2, 5-4, 5-5) Maxey & Sons manufactures two types of storage cabinets-Type A and Type B-and applies manufacturing overhead to all units at the rate of $108 per machine hour. Production information follows. Type A 21,600 40,500 Type B Anticipated volume (units) Direct-material cost per unit 22 33 Direct-labor cost per unit 27 27 The controller, who is studying the use of activity-based costing, has determined that the firm's overhead can be identified with three activities: manufacturing setups, machine processing, and product shipping. Data on the number of setups, machine hours, and outgoing shipments, which are the activities' three respective cost drivers, follow. Type A Type Total 2860. Setups Machine hours Outgoing shipments 43,200 6,150 13,95 103,950 200 150 The firm's total overhead of $11,226,600 is subdivided as follows: manufacturing setups, $2,449,440; machine processing, $6,735,960: and product shipping, $2.041,200 Required: 1. Compute the unit manufacturing cost of Type A and Type B storage cabinets by using the company's current overhead costing procedures 2. Compute the unit manufacturing cost of Type A and Type B storage cabinets by using activity-based costing. 3. Is the cost of the Type A storage cabinet overstated or understated (i.e., distorted) by the use of machine hours to allocate total manufacturing overhead to production? By how much? 4. Assume that the current selling price of a Type A storage cabinet is $322.50 and the marketing manager is contemplating a $37 discount to stimulate volume. Is this discount advisable? 2 of 6