Hi. If you could explain your reasoning for how to calculate the unit costs, that would be great. Thank you!

Problem 2 Veronica's Sofas produces two types of sofas, interior and exterior. The company has direct material costs, direct labor costs, and one indirect-cost pool. The simple costing system allocates indirect costs on the basis of machine-hours. Below is information related to Veronica's Sofas production of the most recent year: Interior Exterior Units sold 3,500 2,200 Selling price $130 $250 $40 $50 Direct material cost per unit Direct labor cost per hour Direct labor hours per unit $20 $30 3 2.5 Production runs 50 80 Material moves 65 155 Machine setups 45 170 Machine-hours 7,500 5,000 Number of inspections 370 200 The owners found out that their competitors are using an activity-based costing system and are curious how an ABC system would impact their product costing decision. The owners identified 6 activities as generating indirect costs: Activity Activity Cost Activity Cost Driver Production scheduling $75,000 Production run Material handling $35,000 Material moves Machine setup $20,000 Machine setups Assembly $80,000 Machine-hours Inspection $5,000 Number of inspections Marketing costs are 5% of sales revenue for each type of sofa. 1) What is the unit cost of the interior sofa under the simple costing system? 2) What is the unit cost of the exterior sofa under the simple costing system? 3) What is the unit cost of the interior sofa under the activity-based costing system? 4) What is the unit cost of the exterior sofa under the activity-based costing system