As the newly hired Controller at Lynbrook, Inc., you have been asked to analyze the traditional

costing method currently being used, with the Activity Based Costing $($ABC$)$ method. Lynbrook

has been using the traditional costing method of allocating overhead cost using Direct Labor

hours for years. The owner of the company believes the ABC method may provide better

information on costs. This new information should provide more accurate data for the company

to make better decisions.

Lynbrook manufactures and sells two types of portable hard drives, a Deluxe version, and a

Regular version. The Deluxe version's production is much more labor$-$intensive than that of the

Regular version. The Regular version, due to the selling price, is more popular than the Deluxe

version. Your staff has been able to compile the following information about the two hard drives:

Required:

Compute the overhead cost per unit for each product by using a plantwide rate based on

direct labor hours. $($Note: Round to two decimal places.$)$

Compute the overhead cost per unit for each product by using ABC. $($Note: Round rates

and unit overhead cost to two decimal places.$)$

Based on the results of part $1$ and $2$ above, which method would you recommend and

what suggestions would you make to help reduce future total overhead costs.