Problem Gigabyte, Inc., manufactures three products for the computer industry: 5-60 Traditional versus Activity- Based Costing Systems Gismos (product G): annual sales, 8,000 units Thingamajigs (product T): annual sales, 15,000 units Whatchamacallits (product W): annual sales, 4,000 units Problem 5-60 Build a Spreadhseet excel worksheet (LO 5-1, 5- 2,5-3,5-4, 5- 5, 5-8) 4. Product G, annual raw- material cost: $840,000 5. Product T, engineering: $6.90 per unit The company uses a traditional, volume-based product-costing system with manufacturing overhead applied on the basis of direct-labor dollars. The product costs have been computed as follows: Raw material Product G Product T Product W Manufacturing overhead" .... $105.00 48.00 (2.4 hr. at $20) 420.00 ($48 x 875%) $573.00 $157.50 $52.50 36.00 (1.8 hr. at $20) 315.00 ($36 x 875%) $508.50 24.00 (1.2 hr. at $20) 210.00 ($24 x 875%) $286.50 Direct labor Total product cost................ The calculation of the predetermined overhead rate is as follows: Manufacturing overhead budget: Machinery. Machine setup Inspection Material handling Engineering Total $3,675,000 15,750 1,575,000 2,625,000 1,034,250 $8,925,000 Direct-labor budget (based on budgeted annual sales): Product G: 8,000 x $48.00 $ 384,000 Product T: Product W: Total 15,000 x $36.00 4,000 x $24.00 = 540,000 96,000 $1,020,000 Predetermined overhead rate = Budgeted overheaad Budgeted direct labor = 875% Gigabyte's pricing method has been to set a target price equal to 150 percent of full product cost. However, only the thingamajigs have been selling at their target