Sunland Company uses an activity - based costing system . It has the following manufacturing activity areas , related drivers used as allocation bases , and cost allocation rates :" Cost Cost Allocation Activity Driver Rate Machine setup Number of setups 50 Material handling Number of parts O. B Machining Machine hours 27 Assembly Direct labour hours 23 Inspection Number of finished units 12 During the month , 100 units were produced , requiring & setups . Each unit consisted of 19 parts and used 1 . 5 direct labour hours and 1 . 25 machine hours . Direct materials cost $ 140 per finished unit . All other manufacturing costs are classified as conversion costs . ABC costs for research and marketing costs are $ 180 per unit . All other nonmanufacturing ABC costs are $ 350 per unit