Camping Suppliers, Inc. manufacturers two types of safety strobe lights, one that is visible for one mile and one that is visible for two miles. Manufacturing overhead has been applied on the basis of direct labor costs. Camping Suppliers has gathered some activity information and is interested in implementing an activity-based costing system. The company wants all overhead costs to be allocated to products. The overhead costs pools and activity drivers are as follows:

Activity Pool		Overhead Costs		Total Driver Usage
Machine Setup		$32,000		500 setups
Assembly		36,000		12,000 machine hours
Total overhead costs		68,000

Other product information:

		One Mile	Two Mile
Units Produced		20,000	12,000
Direct material		$6 per unit	$8 per unit
Direct labor		$8 per unit	$10 per unit
Direct labor costs		20,000	14,000
Machine Setups		150	350
Machine Hours		4,000	8,000

a. Using the traditional method, calculate the predetermined overhead rate as a percentage of the direct labor costs.

b. Using the activity based costing approach, determine the two activity rates.

c. Using the activity based costing approach, determine the unit product costs for the one mile light.