Problem 3 Carol's Kitchen Supply Inc., manufactures two types of small kitchen appliances, Deluxe and Regular. The company manufactured 4.000 units of Deluxe Product and 20,000 units of Regular Product this year. The company currently uses direct labor-hours to assign overhead cost to products. The pre-determined overhead rate is: Manufacturing ovehcad cost -- $20/DLH Direct labor hours Using traditional, job-order costing, the unit product cost for Deluxe and Regular is as follows: Deluxe $ 40.00 20.00 Recular $ 30.00 15.00 Direct materials Direct labor Factory overhead: 2.5 DLH X $20/DLH 2.0 DLH X $20/DLH Total cost per unit 50.00 $110.00 40.00 $85.00 Suppose, however, that factory overhead costs are actually caused by the five activities listed below: Activity Machine setups. Quality Inspections ..... Production orders... Machine-hours worked... Material receipts.. Total......... Costs $ 300,000 200,000 90.000 330.000 80.000 $1.000.000 Also suppose the following transaction data has been collected: Activity Machinc setups....---- Quality inspections..... Production orders Machine-hours worked.. Material receipts...... Number of Transactions Total Deluxe Regular 5.000 3.000 2.000 8.000 5.000 3,000 600 200 33,000 10,000 23,000 800 200 600 400 Required: Using the activity-based costing method to calculate unit costs of Deluxe and Regular, calculate the unit product cost of cach product. Then compare your answers to the unit product costs provided above under the traditional job-order costing system. Which unit product cost method do you feel is better for pricing decisions and other management decisions? Why? Be sure to include a brief overview of the differences between ABC and traditional costing systems