1. Nike Inc. and Adidas AG both use activity-based costing to allocate their manufacturing overhead costs. The following table summarizes the costs and cost drivers:

Activity	Nike Inc. Total Cost ($)	Cost Driver	Cost Driver Quantity	Adidas AG Total Cost ($)
Setup	$300,000	Number of setups	600 setups	$250,000
Machining	$400,000	Machine hours	30,000 hours	$350,000
Quality Control	$200,000	Number of inspections	2,000 inspections	$180,000
Total	$900,000			$780,000

• Nike Inc. produced 500,000 units and Adidas AG produced 600,000 units during the year.
• Calculate the manufacturing overhead cost per unit for Nike Inc. and Adidas AG using activity-based costing.
• Discuss how differences in setup costs between Nike Inc. and Adidas AG impact their production efficiency and cost structure.