Boady & Bath Ltd manufactures two products Shampoo and Conditioner and applies manufacturing overhead to all units at the rate of $3 per machine hour. Production information follows.

	Shampoo	Conditioner
Direct material cost	$6	$10
Direct labour cost	$4	$5
Budgeted volume(units)	8,000	20,000

The management accountant has determined that the firms overhead can be identified within three activities: manufacturing setups, machine processing and product packaging. The products use of cost drivers related to each activity is estimated to be as follows:

	Shampoo	Conditioner	Total
Manufacturing Setups (hours)	50	30	80
Machine processing (hours)	16,000	20,000	36,000
Product packaging (units)	800	600	1400

The firms total overhead of $80,000 is subdivided as follows: manufacturing setups $42,000; machine processing $21,600; and product packaging $16,400

Required:

Calculate the unit manufacturing cost of Shampoo and Conditioner by using the companys current overhead costing procedures.

Calculate the unit manufacturing cost of Shampoo and Conditioner by using activity-based costing.

Compare the total manufacturing costs for Shampoo when using the traditional overhead allocation method and the activity-based costing method to allocate overhead costs. Which of the two methods is more accurate? Explain why.