Company used to consider a traditional costing system based on machine hours; however, they are currently considering an activity-based costing (ABC) approach. The company estimates the usage of 50,000 direct labor hours (DLH) and 30,000 machine hours (MH) for the current year. The following data show the budgeted manufacturing overhead (OH):

Activity center	Cost driver	Activity driver	Cost
Material handling	# of parts handled	6,000,000	$720,000
Setup costs	# of setups	750	$315,000
Machining costs	# of machine hours	30,000	$540,000
Quality control	# of batches	500	$225,000

Cost, sales, and production data for one of the companys products, product A, are as follows:

Direct materials	$4.40 per unit	Setups	2 per batch
Direct labor	$0.75 per unit	Total parts per finished unit	5 parts
Expected sales	20,000 units	Machine hours required	80 MHs per batch
Batch size	5,000 units

1. Compute the total OH that should be charged to each batch of product A using: (1) traditional costing system, and (2) ABC system. (6 points)
2. Compute the cost per unit of product A using: (1) traditional costing system, and (2) ABC system. (3 points)
3. Assume the company wishes to have a gross profit rate of 40 percent. Determine the selling price per unit of product A using: (1) traditional costing system, and (2) ABC system. (1 point)