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Extra Strength Corporation manufactures two models of gym equipment, Model X54 and model Y98. A review of company's accounting records reveals the following unit direct

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Extra Strength Corporation manufactures two models of gym equipment, Model X54 and model Y98. A review of company's accounting records reveals the following unit direct material and direct labor costs and production volumes: Model X54 Model Y98 Production Voitunes omits; 8.000 Direct Material Cost nr unit $500 $360 Direct labor Cost per unit: 2 hours at $30 -r hour -'E 4 hours at $30 er hour Currently, the company uses johorder costing and normal costing system with manufactming overhead applied based on direct labor hours. The budgeted manufacturing overhead costs are as follows; \fUsually, management determines selling p1ices by adding 20% to a product's total cost. Reguired: 2.1 Compute the product per-unit costs and selling prices of the two models by using the current costing system (Use two decimal pointS) (8 pointS) 2.2 Compute the product per-unit costs and selling prices of the two models if the company switches to activity-based costing. (12 points) 2.3 The main competitor just reduces the price of model Y98 to $890. If you were management of Extra Strength Corporation, what would you do to react to this situation? Provide reasons to suppo your recommendations. (10 point5) 2.4 In your opinion, which costing method is more appropriate for the company? Provide reasons to support your answer. (10 pointS)

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