3. Lennox Industries manufactures two products: A and B. A review of the company's accounting records revealed the following per-unit costs and production volumes: Production volume (units) Direct material Direct labor: 2500 5,000 S 60 S 40 24 2 hours at $12 3 hours at $12 36 Manufacturing overhead 186 2 hours at S93 3 hours at S93 279 Manufacturing overhead is currently computed by spreading overhead of $1,860,000 over 20,000 direct labor hours. Management is considering a shift to activity-based costing in an effort to improve the firm's accounting procedures, and the following data are available Cost Driver Volume Cost Pool Cost Cost Driver Total S 240,000 Number of setups 100 Setups General factory Machine processin 20 120 1,500,000Direct labor hours5,000 15,000 20,000 2,2008003,000 120,000 Machine hours $1,860,000 Lennox determines selling prices by adding 40% to a product's total cost. A. Compute the per-unit cost and selling price of product B by using Lennox's current costing procedures. B. Compute the per-unit overhead cost of product B if the company switches to activity-based costing C. Compute B's total per-unit cost and selling price under activity-based costing D. Lennox has recently encountered significant international competition for product B, with considerable business being lost to very aggressive suppliers. Will activity-based costing allow the company to be more competitive with product B from a price perspective? Briefly explain. E. Will the cost and selling price of product A likely increase or decrease if Lennox changes to activity-based costing? Why