Kunkel Company makes two products and uses a conventional costing system in which a single plantwide predetermined overhead rate is computed based on direct labor$-$hours. Data for the two products for the upcoming year follow:

Mercon Wurcon

Direct materials cost per unit $ $10\mathrm{.}00$ $ $8\mathrm{.}00$

Direct labor cost per unit $ $3\mathrm{.}00$ $ $3\mathrm{.}75$

Direct labor$-$hours per unit $0\mathrm{.}200\mathrm{.}25$

Number of units produced $10,00040,000$

These products are customized to some degree for specific customers.

Required:

$1.$ The company's manufacturing overhead costs for the year are expected to be $$336,000.$ Using the company's conventional costing system, compute the unit product costs for the two products.

$2.$ Management is considering an activity$-$based costing system in which half of the overhead would continue to be allocated on the basis of direct labor$-$hours and half would be allocated on the basis of engineering design time. This time is expected to be distributed as follows during the upcoming year:

Mercon Wurcon Total

Engineering design time $($in hours$)4,0004,0008,000$

Compute the unit product costs for the two products using the proposed ABC system.