1. Lemuel office equipment Corporation manufactures two types of filing cabinets - Deluxe and Executive - and applies manufacturing overhead to all units at the rate of P80 per machine hour. Product information follows:

Deluxe

Executive

Direct materials cost

40

65

Direct labor cost

25

25

Budgeted volume (units)

16,000

30,000

The controller who is studying the use of activity-based costing, has determined that the firm's overhead can be identified with 3 activities: manufacturing setups, machine processing and product shipping. Data on number of setups, machine hours and outgoing shipments, which are the activities' three respective cost drivers, follow:

Deluxe

Executive

Total

Setups

100

60

160

Machine hours

32,000

45,000

77,000

Outgoing shipments

200

150

350

The firm's total overhead is 6,160,000. It is subdivided as follows: manufacturing setups: 1,344,000; machine processing, 3,696,0000; and product shipping, 1,120,000.

REQUIRED:

1. Compute the unit manufacturing cost of Deluxe filing cabinets by using the company's current overhead costing procedures.[a]
2. Compute the unit manufacturing cost of Executive filing cabinets by using the company's current overhead costing procedures.[b]
3. Compute the unit manufacturing cost of Deluxe filing cabinets by using activity based costing. Use one decimal point.[c]
4. Compute the unit manufacturing cost of Executive filing cabinets by using activity based costing. Use one decimal point.[d]
5. Calculate the aggregate amount by which Deluxe cabinet line is undercosted by the company's current traditional overhead costing procedures.[e]
6. Calculate the aggregate amount by which Executive cabinet line is overcosted by the company's current traditional overhead costing procedures.[f]
7. Assume that the current selling price of a Deluxe filing cabinet is P270 and the marketing manager is contemplating a discount of P30 to stimulate volume. If the costing used is activity based costing, how much will be the expected loss per unit should the company decide to apply the discount? Use one decimal point.[g]