Dutch Furniture Manufacturing makes two models of office chairs: regular and deluxe. Summary data for the two products showed the following:

Unit Costs Regular Deluxe Direct materials $66.00 $110.00 Direct labour ($20 per hour) 10.00 20.00 Manufacturing overhead* ? ?

* Under the company's current costing, manufacturing overhead is allocated on the basis of direct labour-hours. The overhead for the year is as follows:

Materials handling $ 300,000 Setups 400,000 General factory overhead 500,000 Total $1,200,000

The following table presents the activity levels that relate to the overhead costs: Cost Driver Regular Deluxe Total Number of parts 600,000 900,000 1,500,000 Number of setups 75 50 125 Direct labour-hours ? ? ?

The market price for the regular chairs is $ 88 with expected sales of 90,000 units. The company expects to sell 30,000 deluxe chairs at a selling price of $120 per unit.

Required: A. Determine the unit gross profit for the regular chair using both traditional and activity-based costing methods.

B. Should they revise their pricing?