4.13 Functional-Based versus Activity-Based Costing Baldwin Company produces treadmills. One of its plants produces two versions a stan- dard model and a deluxe model. The deluxe model has a wider and sturdier base and a variety of clectronic gadgets to help the exerciser monitor heartbeat, calories burned, distance traveled, and so on. At the beginning of the year, the following data were pre pared for this plant Chapter 4 Activity-Based Costing Expected quantity Selling price Prime costs Machine hours Direct labor hours Engineering support (hours) Receiving (orders processed) Materials handling (number of moves) Purchasing (number of requisitions) Maintenance (hours used) Paying suppliers (invoices processed) Setting up batches (number of setups) Standard Model 20.000 $280 $3 million 25.000 50.000 9.000 2.000 10,000 Deluxe Model 10.000 $575 $3,5 million 25.000 50.000 21,000 3,000 30.000 1.000 16.000 2,500 360 50 4.000 2,500 Additionally, the following overhead activity costs are reported: Maintenance Engineering support Material handling Setups Purchasing Receiving Paying suppliers $ 400,000 600,000 800,000 500,000 300,000 200,000 200.000 $3,000,000 At the end of the year, every item was realized as budgeted. Required: 1. Calculate the cost per unit for cach product using direct labor hours to assign all overhead costs 2. Calculate activity rates and determine the overhead cost per unit. Compare these costs with those calculated using the functional-based method. Which cost is more accurate! Explain