Filling Smoker Company (FSC) makes two types of barbeque smokers - Basic and Hi-Tech. Here is information about these two product lines: $ Selling price per unit Direct materials per unit Direct labour per unit Direct labour hours per unit Estmated annual unit sales (assume inventory is constant) Basic 430 165 60 2.0 75,000 Hi-Tech $ 670 425 90 3.0 25,000 FSC has a traditional costing system where manufacturing overhead is applied to units on the basis of direct labour hours. FSC estimates that for the upcoming year it will incur. $ Estimated manufacturing overhead Estimated total direct labour hours 2,700,000 225,000 Required (where possible complete your work in the space immediately below each question. If you need more space insert additional rows): 1 What is the total cost and gross margin per unit for the Basic and Hi-Tech models assuming FSC uses a traditional costing system? 4 LITTIG 2 FSC is looking at adopting an activity based costing system instead of using the traditional costing system. Preliminary work shows that manufacturing overhead costs can be sorted into 4 activity cost pools as follows: Expected Activity Activity Overhead Activity Measure Costs Basic Hi-Tech Total direct labour Supporting direct labour hours $ 1,150,000 150,000 75,000 225,000 Batch costs # of setups 1,240,000 75 275 350 Product related # of products 210,000 1 1 2 Other square feet 100,000 15.000 17,500 32.500 $ 2,700,000 What is the total cost and the gross margin per unit for the Basic and the Hi-tech models using Activity Based Costing? 3 Comment on the difference in the resulting cost per unit for each model between the traditional costing and activity based costing. Which is more accurate? Why