5. Cambridge Company makes two products and uses a conventional costing system in which a single plantwide predetermined overhead rate is computed based on direct labor hours. Data for the two products for the upcoming year follow: Direct materials cost per unit Direct labor hour per unit Number of units produced X $70 0.4 hours 10,000 units Y $20 0.6 hours 35,000 units Additional information is given for the two products. The direct labor is $60 per hour. 2 The manufacturing overhead cost is estimated to be $720,000 for the upcoming year. Required: a. What is the pre-determined plantwide rate per direct labor hour? b. Using the plantwide overhead rate, compute the unit product costs for the two products. Management is considering an activity-based costing (ABC) system in which one-third of the overhead would continue to be allocated on the basis of direct labor-hours, one-third allocated on the basis of product testing hours and one-third allocated on the basis of machine hours. The activity data are shown below: x Y Total Product testing hours 4,000 2,000 6,000 Machine hours 6,000 4,000 10,000 c. Determine the total amount of manufacturing overhead cost that would be assigned to each product using the ABC system. After these totals have been computed, determine the amount of manufacturing overhead cost per unit of each product. d. Compute the unit product costs of each product. e. Compare product costs under the two costing systems. Explain why the product costs differ between the two systems