Dillon Corporation manufactures computer monitors. The company uses a job order costing system, using a plant-wide rate for allocating overhead costs. The current cost method allocates overhead on the basis of direct manufacturing labor hours, using a rate of $100 per labor hour. The plant manager is considering switching over to an activity-based costing system and identifies the following production activities and their cost drivers (these activities are performed for a batch of 99 monitors).

Activities Cost driver Allocation Rate

Material handling Number of parts $2 per part

Assembly Labor hours $20 per hour

Inspection Minutes at inspection station $3 per minute

What are the overhead costs per one unit of monitors if the activity-based costing system is used and a batch of 99 monitors are produced? The batch requires 400 parts, 8 direct manufacturing labor hours, and 10 minutes of inspection time.

$8 per monitor

$10 per monitor

$12 per monitor

$13 per monitor