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Palace Inc. manufactures two product lines (Deluxe and Standard). Currently, the company allocates overhead costs to the product lines based on direct labour hours. For

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Palace Inc. manufactures two product lines (Deluxe and Standard). Currently, the company allocates overhead costs to the product lines based on direct labour hours. For 2021, the company gathered the following data for the two product lines: Deluxe Standard Sales (in units) 5,000.00 40,000.00 Sales price (per unit) $11,700.00 $8,550.00 Direct materials and direct labour costs per unit $3,240.00 $2,340.00 Manufacturing support costs per unit $1,320.00 $1,860.00 Last year, the company purchased an expensive piece of equipment that enabled the company to add more sophisticated options to the Deluxe product line. In response, the CFO suggested that the company implement an activity-based costing (ABC) system to provide useful information for product mix and advertising strategy purposes. To help with this decision, the company's cost accountant gathered the following data: Activity Cost Driber Cost Deluxe Standard Total Setups Number of setups $850,000 800.00 200.00 1,000.00 Machine-related Number of machine hours $57,400,000 700,000.00 700,000.00 1,400,000.00 Packing Number of shipments $9,000,000 75,000.00 300,000.00 375,000.00 Inspection Number of inspection hours S13,750,000 178,250.00 165,500.00 343,750.00 Total manufacturing overhead costs $81,000,000 Required (A) Using the current costing system, compute the total manufacturing cost per unit and the profit per unit for each product line. (B) Using ABC, compute the total manufacturing overhead cost that would be allocated to each product line and the manufacturing overhead per unit for each product line. (C) Using ABC, compute the total manufacturing cost per unit and the profit per unit for each product line. (D) Which method (single-rate method or ABC) do you recommend that the company adopt? Why? Be sure to support your recommendation with a discussion of your calculations

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