Spring Break Extra Credit Problem: Traditional Costing vs. ABC Costing Cosgrove Company manufactures two products, Product K-7 and Product L-15. Product L-15 is of fairly recent origin, having been developed as an attempt to enter a market closely related to that of Product K-7. Product L-15 is the more complex of the two products, requiring 2.0 hours of direct labor time per unit to manufacture compared to 1.0 hour of direct labor time for Product K-7. Product L-15 is produced on an automated production line. Overhead currently is applied to the products on the basis of direct labor-hours. The company estimated it would incur $510,000 in manufacturing overhead costs and produce 10,000 units of Product L-15 and 40,000 units of Product K- 7 during the current year. Unit costs for materials and labor are: Direct material........ Direct labor.............. Product K-7 $11 Product L-15 $24 $6 $12 Required: 1. Using Traditional Costing Method, a. Compute the plantwide overhead rate. b. Determine the unit product cost of each product for the current year. c. Assuming Cosgrove wants to have 250% markup on cost, what would be Cosgrove's selling price for Product K-7 and Product L-15 The company is considering the use of activity-based costing as an alternative to its traditional costing method for manufacturing overhead. Data relating to the company's activity cost pools for the current year are given below: