25 2. The Drinkwater Corporation produces two products, Standard and Custom, and uses a costing system that accumulates all overhead in a single cost pool which is allocated based on direct labor costs. Management has decided to implement an activity-based costing system which has identified that significant amounts of overhead cost are related to setup and design activities. The number of setups and the number of design hours were selected as the cost drivers for the two new cost pools, and direct labor cost will continue to be used as the cost driver for the remaining overhead. Information concerning their most recent year of operations is as follows: Units produced Direct material cost: Per unit Total Direct labor cost Standard 73,500 Total 73,625 Custom 125 12 $ 882,000 100 $12,500 $2,910,000 $90,000 $ 894,500 $3,000,000 Setups Need 30 30 Design hours 12,000 3,000 60 15,000 (2) Overhead: Setup related POR $ 300,000 Design related 900,000 Other a) 3.300,000 Total overhead $4,500,000 Required: a. Calculate the total and unit product costs using the existing cost system. b. Calculate the total and unit product costs using an activity-based cost system