Exercise 7-10 Eric Parker has been studying his department's profitability reports for the past six months. He has just completed a managerial accounting course and is beginning to question the company's approach to allocating overhead to products based on machine hours. The current department overhead budget of $1,140,000 is based on 40,000 machine hours. In an initial analysis of overhead costs, Eric has identified the following activity cost pools. Cost Pool Expected Cost Expected Activities Product assembly $ 600,000 40,000 Machine hours Machine setup and calibration 320,000 2,000 setups Product inspection 90,000 1,500 batches Raw materials storage 130,000 500,000 pounds $1,140,000 Eric Parker is taking the next step in his exploration of activity-based costing and wants to examine the overhead costs that would be allocated to two of the department's four products. He has gathered the following budget information about each product. Component 3F5 1,000 40 Component 176 10,000 Driver Usage Machine hours Setups Batches Pounds of raw materials 20 20 10 10,000 10,000 Eric Parker found that the budget included production of 500 units of Component 3F5 and 5,000 units of Component 176. (a) Calculate the overhead cost per unit of Component 3F5 and Component T76 under traditional costing using machine hours as the overhead application base. (Round overhead rates to 2 decimal places, e.g. 5.27 and round final answers to 2 decimal places, e.g. 52.75.) Component 3F5 Component 176 Overhead cost per unit $ (b) Calculate the overhead cost per unit of Component 3F5 and Component 176 underactivity-based costing. (Round overhead rates to 2 decimal places, e.g. 5.27 and round final answers to 2 decimal places, e.g. 52.75.) Component 3F5 Component 176 Overhead per unit $