Company A's product mix consists of two distinct product lines: Line 1 and Line 2. Under the current costing system, manufacturing overhead is applied to each line based on machine hours. Machine setup costs account for the majority of manufacturing overhead costs and are estimated to be $T5,000. The controller has suggested to management that an activity-based costing system be analyzed and has determined that the number of machine setups drives the total machine setup costs. The following information was compiled for the analysis: Budgeted number of units to be produced _m Bud : eted number of machine hum for - . duction level Budgeted number of machine setups for production level Which of the following statements is correct concerning the analysis of the ABC system for Company A with respect to machine setup costs