Believing that its traditional cost system may be providing misleading information, an organization is considering an activity-based costing approach. It now employs an absorption cost system and has been applying its manufacturing overhead on the basis of machine hours. The organization plans on using 50,000 direct labor hours and 30,000 machine labor hours in the coming year. The following data show the manufacturing overhead that is budgeted.

Activity Cost Driver Budgeted Activity Budgeted Cost

Material handling No. of parts handled 6,000,000 $720,000

Set-up costs No. of set-ups 750 $315,000

Machining costs Machine hours 30,000 $540,000

Quality control No. of batches 500 $225,000

Total manufacturing overhead cost: ( $1,800,000)

Cost, sales and production data for one of the organizations product for the coming year are as follows:

Direct material cost per unit $4.40

Direct labor cost per unit .05 DLH @ $15.00/DLH $0.75

Sales & production data:-

Expected sales : 20,000 units

Batch size: 5,000 units

Setups : 2 per batch

Total parts per finished unit: 5 parts

Machine hours (MH) required : 80 MH per batch

Required:

Calculate the cost per unit for the product using absorption costing.

Calculate the cost per unit for the product using activity-based costing.

Please, show me how it is done (explain) thank you