Calculate the unit manufacturing cost of Deluxe and Executive cabinets by using activity-based costing

Locket Storage Ltd manufactures two types of storage cabinets-Deluxe and Executive-and applies manufacturing overhead to all units at the rate of $80 per machine hour. Production information follows: Deluxe $ 35 Executive $ 60 Direct material cost Direct labour cost Budgeted volume (units) 20 8000 20 15000 The management accountant, who is studying activity-based costing, has determined that the firm's overhead can be identified with three activities: manufacturing setups, machine processing and product shipping. Data on the number of setups, machine hours and outgoing shipments, which are the activities' three respective cost drivers, follow: Total Deluxe 50 Executive 30 80 Setups Machine hours Outgoing shipments 16000 22 500 75 38500 175 100 The firm's total overhead of $3 080 000 is subdivided as follows: manufacturing setups, $672 000; machine processing, $1 848 000; and product shipping, $560 000