Award 4100 points Maxey & Sons manufactures two types of storage cabinets Type A and Type lB-and applies manufacturing overhead te al units at the rate of $80 per machine hour Production information follows Type A Type 8,000 15,000 $ 35 60 Anticipated velume (units) Direct-material cost per unit Direch labor cost per unit The controller, who is studying the use of activity-based costing, has delermined that the Grm's overhead can be idenbfied with three activities manufacturing selups, machine processing, and product shipping Data on the number of selups machine hours, and outgoing shipments, which are the activities three respective cost drivers, follow Type A Type B Total 80 16,000 22.500 38,800 175 50 30 Setups Machine hours Outgoing shipments 100 The firm's total overhead of $3,080,000 is subdivided as follows manufacturing selups, $672.000, machine processing $1.848,000: and product shipping. $560,000. Required 1. Compute the unit manufacturing cost of Type A and Type B storage cabinets by using the company's current overhead costing procedures. 2. Compute the unil manufacturing cost of Type A and Type B storage cabinets by using activity-based costing 3. Is the cost of the Type A storage cabinet overstated or understated (i.e., distorted) by the use of machine hours to allocate total manufacturing overhead to production? By how much? 4. Assume that the current selling price of a Type A storage cabinet is $260 and the marketing manager is contemplating a $30 discount to stimulate volume Is this discount advisable