Activity-Based Costing and Gross Margin Calculations Stafford Manufacturing, Inc., produces two different products. Product 1 sells for $950 each, and Product 2 sells for $700 each. Estimated annual production and sales for Product 1 and Product 2 are 2,100 units and 2,900 units, respectively. Direct materials are $350 for Product 1 and $200 for Product 2. Direct labor costs are $300 for Product 1 and $310 for Product 2. Stafford purchases materials for Product 1 every month and for Product 2 every two months. On average, Stafford performs 10 setups each month for Product 1 production and 8 setups each month for Product 2 production. The following are manufacturing overhead costs incurred by Stafford Manufacturing:

Required:
1. Assuming that the allocation bases for the three manufacturing overhead costs are production volume for quality control, number of purchases for purchasing costs, and number of setups for miscellaneous manufacturing overhead, calculate the cost per unit of each allocation basis.
2. Determine total manufacturing overhead costs for each product.
3. Determine the gross margin percent for Stafford Manufacturing for each product it produces.

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Quality control $150,000 Purchasing costs 74,880 Miscellaneous manufacturing overhead 62,640