8) The following estimates are available for a manufacturing company for their upcoming year. Estimated manufacturing overhead Product engineering Production machine setup Production machine depreciation Other overhead $160,000 $200,000 $450,000 $350,000 $1,160,000 Estimated overhead activities Number of product engineering hours Number of machine setups I Number of machine hours Number of direct labor hours 4,400 100 18,000 25,000 The following information is available for production runs for two products, product 1, and product 2 Product 1 Product 2 Selling price per unit $23 $26 Number of units produced 5000 500 Total direct material cost $60,000 $6,000 Total direct labor cost $14,400 $1,440 Number of product engineering hours 100 100 Number of machine setups 1 1 Number of machine hours 200 20 Number of direct labor hours 800 80 The company uses a traditional overhead allocation system. Manufacturing overhead is allocated based on direct labor hours. I The sales manager for the company has submitted a proposal that would shift the marketing focus to low-volume products such as product 2. The proposal was prompted by the higher markups that can be charged for these products without customer complaint. The company president is concerned that the company's cost per unit may be sending the wrong message. He recently learned of activity-based costing and wonders if it might help. Assume that you are part of a group that has been assigned to review the situation. Required: a) Determine the per unit cost for product 1 and product 2 using direct labor hours as the allocation base for all manufacturing overhead costs. b) Determine the per unit cost for product one in product to using activity-based costing to allocate manufacturing overhead costs. (Note: allocate other overhead costs based on direct labor hours.)