Cuddles Corp produces winter sweaters for pets. They make two models called Dud and Stud. Here is the relevant production information to help you account for the overhead costs: Dud Stud Output Volume 2,000 units 10,000 units Direct Labor Hours 1 hour per unit 3 hours per unit Number of Set Ups 40 100 Machine Hours 2,000 1,000 Engineering Hours 6,000 10,000 Raw Material Cost $5 per unit $10 per unit Direct Labor Cost_(Workers are paid a wage rate of $10 per direct labor hour) Activity Center Overhead Costs Allocation Base (Cost Driver) Setting Up to Produce Polishing Engineering $ 2,800 $ 30,000 $191,200 Number of Setups Number of Machine Hours Number of Engineering Hours 1. If Cuddles allocates all the overhead as one lump sum on the basis of direct labor hours consumed by the two type of sweaters, determine the unit production cost of each type of sweater. 2. If Cuddles uses ABC to account for overhead using the three activity centers identified above, determine the unit production cost of each type of collar. 3. Explain why the single rate traditional system used in 1 above results in a different unit cost from that determined by the ABC system used in 2 above. Use the Setting Up Batch Activity to illustrate ABCs recognition of economies of scale that comes from larger batch size. Use Polishing Activity to illustrate the consistent allocation principle associated with ABC overhead accounting