Escuha Company produces two type of calculators: scientific and business. Both products pass through two producing departments. The business calculator is by far the most popular. The following data have been gathered for these two products: Product-Related Data
Scientific		Business
Units produced per year	75,000		750,000
Prime costs	$250,000		$2,500,000
Direct labor hours	100,000		1,000,000
Machine hours	50,000		500,000
Production runs	100		150
Inspection hours	2,000		3,000
Maintenance hours	2,250		9,000

1) Compute the overhead cost per unit for each product using a plantwide, unit-based rate using direct labor hours.

2) Compute the overhead cost per unit for each product using departmental rates. In calculating departmental rates, use machine hours for Department 1 and direct labor hours for Department 2. Repeat using direct labor hours for Department 1 and machine hours for Department 2.

3) Compute the overhead cost per unit for each product using activity-based costing.

4) Comment on the ability of departmental rates to improve the accuracy of product costing.