Manufacturing uses a traditional costing system to apply manufacturing overhead to its products. Renforth uses a predetermined overhead rate based on direct labour hours. Information about its two products is below:

	Benches	Chairs
Direct materials per unit	$65	$42
Direct labour cost $12 per hour
Direct labour hours per unit	2	1.5
Estimated annual units produced	7,000	9,000

Total manufacturing overhead for the year is estimated at $240,120, and the estimated total labour hours for the year is 27,500.

Renforth is considering using activity-based-costing instead of a plant-wide overhead rate. The data for an ABC system is below:

Activities and Activity Measures	Estimated total Overhead Cost for the year
Cutting (machine hours)	$30,000
Assembly (per batch)	130,000
Finishing (direct labour hours)	85,000
Total	245,000

Activities and Activity Measures	Benches	Chairs	Total
Cutting (machine hours)	2,000 hours	2,400 hours	4,400 hours
Assembly (per batch)	50 batches	60 batches	110 batches
Finishing (direct labour hours)	6,200 hours	8,800 hours	15,000 hours

Required: a. Determine the estimated manufacturing overhead cost per unit and total cost per unit for each of the company's two products under the traditional costing system using the predetermined overhead rate.

b. Determine the manufacturing overhead cost per unit for each of the company's two products under activity-based costing system.

c. What additional information would an ABC system provide for management?

Do you think they should switch to an ABC system? Why or why not?

Show your calculations, and ensure your answers are clearly presented and labelled. Keep in mind that rates and costs are money. As necessary, round rates to dollars and cents.