em ABC vs. Traditional Costing The MLC Corporation is applying manufacturing overhead to its product on the basis of machine hours. The machine hour rate for the current accounting period is $100 per hour. The company has two products, Deluxe and Standard, require the same direct labor (S65), but differing in amounts of direct materials (S75 and $40, respectively). The company is anticipating to produce 5,000 units of Deluxe and 4,000 units of Standard. The company's controller, Tom Word, is studying the use of ABC for the firm. He determined that overhead can be identified with three major activities and has gathered the following data: Production setups Machine processing Packing and shipping ActivityNumber of setups Cost Driver Cost S 60,000 340,000 Number of machine hours Number of shipments $500,000 Estimated cost-driver data for the two products and the company as a whole are: Standard 29 Number of setups Number of machine hours Number of shipments Total 40 5,000 125 3,000 30 (a) Compute the total costs of Deluxe and Standard, assuming the use of machine hour as an application rate (b) Compute activity-based drivers for production setups, machine processing, and packing and shipping (c) Compute the total costs of Deluxe and Standard, assuming the use of ABC. (d) How would Mr. Tom, likely to react, if the compan y marketing manager is suggesting a campaign to promote the sales of Standard for $162