KPhone produces quality smart phones. Its factory produces two popular models: the KPhone Pro and the KPhone Pro Max. At the beginning of the year, the following planned production information was tabled to assist in cost planning:

	Pro Max	Pro
Quantity planned	100,000	800,000
Selling Price	$1,650.00	$900.00
Unit prime cost	$530.00	$483.00

In addition, the following information was provided for calculating overhead costs for each phone.

Activity Name	Activity Driver	Total Activity Cost	Pro Max	Pro
Setups	Number of setups	$14,000,000.00	500	200
Machining	Machine hours	$65,000,000.00	100,000	400,000
Engineering	Engineering hours	$10,000,000.00	100,000	200,000
Packing	Packing orders	$1,000,000.00	100,000	800,000

Required:

Using activity based costing, calculate the overhead rates for each activity. Using activity based costing, calculate the per-unit cost for each product (rounding to the nearest dollar). Assume that instead of activity based costing, overhead was allocated on the basis of machine hours. Now calculate the per-unit cost for each product (rounding to the nearest dollar) and explain the difference in the per-unit product costs.