Ramsey Company produces speakers (Model A and Model B). Both products pass through two producing departments. Model A's production is much more labor-intensive than that of Model B. Model B is also the more popular of the two speakers. The following data has been gathered for the two products:

	Product Data
	Model A	Model B
Units produced per year	10,000	100,000
Prime costs	$148,000	$1,480,000
Direct labor hours	135,000	300,000
Machine hours	21,000	197,000
Production runs	40	50
Inspection hours	1,000	1,400
Maintenance hours	9,000	91,000
Overhead costs:
Setup costs	$252,000
Inspection costs	276,000
Machining	289,500
Maintenance	270,000
Total	$1,087,500

	Required:
1.	Compute the overhead cost per unit for each product by using a plantwide rate based on direct labor hours. (Round to two decimal places.)
2.	Compute the overhead cost per unit for each product by using ABC. (Round rates and unit overhead cost to two decimal places.)
3.	Suppose that Ramsey decides to use departmental overhead rates. There are two departments: Department 1 (machine intensive) with a rate of $3.40 per machine hour and Department 2 (labor intensive) with a rate of $1.00 per direct labor hour. The consumption of these two drivers is as follows:

	Department 1	Department 2
	Machine Hours	Direct Labor Hours
Model A	10,000	135,000
Model B	190,000	260,000

	Compute the overhead cost per unit for each product by using departmental rates. (Round to two decimal places.)
4.	CONCEPTUAL CONNECTION Using the activity-based product costs as the standard, comment on the ability of departmental rates to improve the accuracy of product costing. Did the departmental rates do better than the plantwide rate?