Assume that Panasonic Company has determined its estimated total manufacturing overhead cost for one of its plants to be $206,700, consisting of the following activity cost pools for the current month:

Activity Centers Activity Costs

Assembly setups 45,000

Materials handling 15,300

Assembly 120,000

Maintenance 26,400

Total: 206,700

Cost Drivers Activity Level

Setup hours 1,500

Number of moves 300

Assembly hours 12,000

Maintenance hours 1,200

Total direct labor hours used during the month were 7,950. Panasonic produces many different electronic products, including the following two products produced during the current month.

Model X301 Model Z205

Units produced 1,000 1,000

Direct materials costs 15,000 15,000

Direct labor costs 12,500 12,500

Direct labor hours 500 500

Setup hours 50 100

Materials moves 25 50

Assembly hours 800 800

Maintenance hours 10 40

Calculate the total per unit cost of each model using direct labor hours to assign manufacturing overhead to products.

Calculate the total per-unit cost of each model using activity-based costing to assign manufacturing overhead to products.

Comment on the accuracy of the two methods for determining product costs.

Discuss some of the strategic implications of your answers to the previous requirements.