Parker Company produces mathematical and financial calculators and operates at capacity. Data related to the two products are presented here: Mathematical Financial Annual production in units 50,000 100,000 Direct material costs 150,000 300,000 Direct manufacturing labour costs 50,000 100,000 Direct manufacturing labour-hours 2,500 5,000 Machine-hours 25,000 50,000 Number of production runs 50 50 Inspection hours 1,000 500 Total manufacturing overhead costs are as follows: Overhead Costs Machining costs 375,000 Activity Machining Setup costs 120,000 Inspection costs 105,000 Set up Inspection Cost Driver Machine-hours Production runs Inspection-hours At present, Parker Company uses a blanket overhead absorption rate (traditional absorption costing), based on direct manufacturing labour hours, but the company executives are thinking of moving to an Activity Based Costing System. Required: (a) Calculate the manufacturing cost per unit for each product, using the existing blanket overhead absorption rate (traditional absorption costing). (b) Calculate the total manufacturing cost per unit for each product under an ABC system. (c) Critically discuss the overhead absorption methods used in (a) and (b) and comment on their appropriateness in these circumstances, outlining the advantages and disadvantages of each method of costing.