Activity-based costing - 15 minutes Blitzen Corporation plans to make snowshoes. The company currently wants to make two models: Flat terrain and Mountain terrain. The company is planning to use activity-based costing to apply its estimated $250,000 of overhead costs to its products. The company has the following information about its overhead: Expected activity Activity (cost driver) Estimated MOH Total Flat Mountain Assembly (labour hours) $125,000 6,250 4,000 2,250 Quality control (inspection 75,000 2,500 1,800 700 hours) Testing (number of tests) 50,000 250 175 75 $250,000 The following costs data is known: Flat terrain Mountain terrain Direct materials $45 $85 Direct labour $20 $40 Number of units 4,000 1,800 The company is planning to sell the flat terrain model for $150 and the mountain terrain model for $240. Required: a) Compute the activity rates for each activity b) Determine the expected unit cost of the terrain model c) Determine the expected unit cost of the mountain model