Lightsaber, Inc. manufactures two models of high-pressure steam valves, the BB7 model and the BB8 model. Budgeted manufacturing overhead cost and operating data regarding production and sales of 2,000 units of the BB7 model and 8,000 units of the BB8 model for 2023 follow:

			Budgeted Level for Cost Driver
Activity Cost Pool	Budgeted Overhead Costs	Cost Driver	BB7	BB8	Total
Machine setups	$800,000	Number of setups	150	100	250
Vendor negotiation	200,000	Number of parts	800	200	1,000
Assembly	400,000	Direct labour hours	4,000	36,000	40,000
	$1,400,000

Required:

1. Identifyandbriefly explain each of the three cost drivers as either unit-level or batch-level or product-level or organization-sustaining level.
2. Calculate the budgeted manufacturing overhead cost for each unit of the two models, using only one unit-level cost driver.
3. Calculate the budgeted manufacturing overhead cost for each unit of the two models, using the activity-based-costing (ABC) method.
4. Assume Lightsaber, Inc. will use only the unit-level driver. Compared to the ABC method, by how much (in terms of total allocated/applied manufacturing overhead cost), if any, will the total output of each model be either under-costed or over-costed?
5. Is the result obtained in part (4) above consistent with your expectations? Explain.