#D: Activity-based Costing (ABC) Sunshine Furniture (SF) manufactures outside furniture in sets for use in homes. SF has three customer groups, which it calls the value, quality, and luxury groups. The value products are targeted to low-price motels that are looking for simple furniture, while the luxury furniture is targeted to the very best hotels. The value line is attractive to a variety of homeowners that appreciate the combination of quality and value. Currently there has been a small increase in the quality and value lines, and an appreciable increase in demand in the luxury line, reflecting cyclical changes in the marketplace. Luxury hotels are now in more demand for business travel, while a few years ago, the value segment was the most popular for business travelers. SF wants to be able to respond to the increased demand with increased production but worries about the increased production cost and about price setting as its mix of customers and production changes. SF has used a volume-based overhead allocation rate based on direct labor hours for some time. Direct labor cost is $15 per hour. Budgeted Coat Cost Driver Materials handling $ 332.100 Number of parts Product scheduling 169.600 Number of production orders Setup labo 192.200 Number of setups Automated machinery 1,400.000 Machine hours Finishing 681.500 Direct labor hours Pack and ship 249,700 Number of orders shipped $ 3,025,100 General, selling, and administrative costs $ 4,400,000 The budgeted production data for the three product lines follow. Product Lines Value Quality Luxury sets produced 14.400 5.000 600 Price $ 590 $ 840 $ 1.140 Direct materiale cost per set $ 90 $ 70 $ 130 Number of parte par get 30 50 110 Direct labor hours per set Machine hours per set 15 Production orders 50 70 200 Production setups 20 50 50 Orders shipped 1.000 2.000 300 Number of Inspections 2 14 Required: To earn full or partial marks, show all calculations in good form. 1. Determine the manufacturing overhead cost per unit of each of the company's two products under the traditional costing system 2. Determine the manufacturing overhead cost per unit of each of the company's two products under activity-based costing system 3. As a manager, discuss why ABC may be better that Job-order and Process costing. Support your response with appropriate reference. Use APA