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National Inc. manufactures two models of CMD that can be used as cell phones, MPX, and digital camcorders. ModelAnnual Sales in UnitsHigh F11,800Great P17,800 National

National Inc. manufactures two models of CMD that can be used as cell phones, MPX, and digital camcorders.

ModelAnnual Sales

in UnitsHigh F11,800Great P17,800

National uses a volume-based costing system to apply factory overhead based on direct labor dollars. The unit prime costs of each product were as follows:

High FGreat PDirect materials$39.80$27.20Direct labor$19.40$15.00

Budget factory overhead:Engineering and Design2,760engineering hours$441,600Quality Control13,190inspection hours325,500Machinery34,070machine hours610,200Miscellaneous Overhead26,750direct labor hours159,480Total$1,536,780

National's controller had been researching activity-based costing and decided to switch to it. A special study determined National's two products have the following budgeted activities:

High FGreat PEngineering and design hours1,1401,620Quality control inspection hours5,8207,370Machine hours20,46013,610Labor hours12,18014,570

Using activity-based costing, applied machinery overhead for the High F model per unit is

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