Problem 9-62 (Algo) Activity-Based Costing, Cost Flow Diagram, Cost Hierarchy, and Predetermined Overhead Rates (LO 9-3, 5, 6) Kensington Electronics (KE) is a wholly owned subsidiary of CWD Enterprises, a global manufacturing company. Unlike most CWD companies, KE uses a traditional costing system to compute product costs. After the last review by CWD staff, the financial management at KE decided to consider switching to activity-based costing. The controller's staff at KE has identified classified manufacturing overhead costs for the next quarter into four overhead cost pools. They also identified an appropriate cost driver for each pool. The company manufactures two basic products, which are components of navigation systems. The products are the NAV1 and NAV1AV. Although similar, the NAV1-AV uses upgraded materials. In addition, the NAV1-AV needs to be certified for use in aircraft navigational equipment. All units produced are tested, but the tests are more extensive for the NAV1-AV model. The following are data for production for the next quarter: Required: a. The current cost accounting system charges overhead to products based on machine-hours. What unit product costs will be reported for the two products if the current cost system continues to be used? b. What are the cost-driver rates for the four cost pools identified by the controller's staff? d. What unit product costs will be reported for the three products if the ABC system proposed by the controller's staff is adopted? e. How would the activities identified by the controller's staff be classified in terms of the levels of the cost hierarchy