PROBLEM J-2A Contrasting ABC and Conventional Product Costs (L02, LO), L04) Precision Manufacturing Inc. (PMI) makes two types of industrial component parts--the EX300 and the TX500. It annually produces 60.000 units of Ex 200 and 12.00 units of TX500. The company cover monal cost system allocates manufacturing werhead to products using a plantwide overhead rate and direct labor dollars as the allocation buse. Additional information relating to the company's two product lines in CHECK FIGURE (2) Unit product cost for EX300: $12.13 shown below: Total EX300 $366,325 $120,000 TX500 $162,550 $42,500 Direct materials Direct labor $528.875 162,500 The company is considering implementing an activity-based costing system that distributes all of its manu- facturing overhead to four activities as shown below Activity TX500 Total EX300 Manufacturing Overhead $198.250 150,000 100,250 60.125 $508,625 Activity Cost Pool (and Activity Measure) Machining (machine-hours) Setups (setup hours) Product-level (number of products) General factory (direct labor dollars) Total manufacturing overhead cost 90,000 75 1 $120,000 152,500 375 2 $162,500 62,500 300 1 $42,500 Required: 1. Compute the plantwide overhead rate that would be used in the company's conventional cost system. 2. Compute the activity rate for each activity cost pool. Using the activity rates, compute the unit product Using the plantwide rate, compute the unit product cost for each product. cost for each product. 3. Why do the conventional and activity-based cost assignments differ from one another