Activity-Bases coseng Doxtown Products manufactures fishing equipment for recreational use. The Miramichi plant produces the company's two versions of a special reel used for river fishing. The two models are the M-008, a basic reel, and the M-123, a new and improved version. Cost accoun tants at company headquarters have prepared costs for the two rools for the most recent period. The plant manager is concerned. The cost report does not coincide with her intuition about the relativo costs of the two models. She has asked you to review the cost accounting and help her prepare a response to headquarters Manufacturing overbead is currently assigned to products based on their direct labor costs. For the most recent month, manufacturing overhead was $280,000. During that time, the company produced 12,000 units of the M-008 and 2,000 units of the M-123. The direct costs of production were as follows: M-008 Total M-123 $80,000 40,000 Direct materials Direct labor.. $100,000 100,000 $180,000 140,000 Management determined that overhead costs are caused by three cost drivers. These driv. ers and their costs for last year were as follows: Costs Activity Lovel M-008 M-123 Total 5,000 3,000 8,000 10 10 20 20 40 60 Cost Driver Number of machine-hours. $120,000 Number of production runs 70,000 Number of inspections 90,000 Total overhead ... $280,000 With SAWAN 11 Required a. How much overhead will be assigned to each product if these three cost drivers are pred to allocate overhead? What is the total cost per unit produced for each product? How much of the overbead will be assigned to cach product if direct labor cost in used to allocate overhead? What is the total cost per unit produced for each product @ Draft a memo for the plant manager explaining why the two systems result in different costs along with your recommendation for which costing system to us. e