1. Lockheed Martin and Northrop Grumman allocate their manufacturing overhead costs using activity-based costing. The following table summarizes the costs and cost drivers:

Activity	Lockheed Martin Total Cost ($)	Cost Driver	Cost Driver Quantity	Northrop Grumman Total Cost ($)
Setup	$1,500,000	Number of setups	1,500 setups	$1,200,000
Machining	$3,000,000	Machine hours	120,000 hours	$2,500,000
Quality Control	$1,800,000	Number of inspections	20,000 inspections	$1,600,000
Total	$6,300,000			$5,300,000

• Lockheed Martin produced 1,000 aircraft, and Northrop Grumman produced 1,200 aircraft during the year.
• Allocate manufacturing overhead costs per aircraft for Lockheed Martin and Northrop Grumman using activity-based costing.
• Discuss how differences in setup costs impact Lockheed Martin's and Northrop Grumman's manufacturing efficiency and cost structure.