Relax with Us Inc. produces outdoor lounge chairs in two models: Cozy and Ultra Cozy. The company has made the Cozy line for many years and has recently introduced the Ultra Cozy line. Unfortunately, profits began to decline as sales increased for Ultra Cozy. The company uses the traditional method of overhead allocation bused on direct labor hours. Management has budgeted $2.000.000 in overhead. The company produces 48.250 Cozy chairs and 9.500 Ultra Cozy chairs. Each Cozy chair takes 0.8 hours of direct labor while the Ultra chair takes 1.2 direct labor hours. Direct Labor is $10 per hour. The Comfy chair takes $60 of Direct Material while the Ultra chair uses $115 in direct material The company is considering changing to the ABC method of overhead allocation. The CFO has accumulated the following data: Activity by Product ABC Cost Driver Budgeted OH Total Activity Comfy Ultra Purchase Orders Purchase Orders $85.960 1.228 900 328 Machine Hours # Machine Hours S1,250,000 31.250 21.000 15,250 Inspection and Tosting Inspections $664.00 12,770 5.370 7.400 1. Compute the predetermined overhead rate AND total product cost per unit using the traditional method. 8 pts 2. Compute the ABC overhead rates AND total product cost using the ABC method. 10 pts 3. Write a short memo from the CFO to the President comparing the traditional method to the ABC method with an explanation of the recommended method. 5 pis