ABC Firm produces 2 products. Product A is a high end product that requires more direct labout and better materials. Product A sells for $200 per unit. Product B is sold in vast quantities and is made in huge production runs. Product B sells for $50 per unit. At the beginning of 2016, ABC made the following estimations and at the end of the year, the following actual amounts were recorded.

1. Assume that overhead is applied on the basis of DL hours. Compute the cost per unit and the gross margin per unit for each product.

2. Assume that overhead is applied on the basis of machine hours. Compute the cost per unit and the gross margin per unit for each product.

3. Compute overhead over or under applied for each overhead application base.