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1. The unit product costs under the company's conventional TRADITIONAL costing system would be computed as follows: Number of units produced (a) ......... Direct labour-hours per unit (b).............. Total direct labour-hours (a) (b) ..... Mercon Wurcon Total 10,000 40,000 0.20 0.25 2,000 10,000 12,000 Total manufacturing overhead (a) ............. Total direct labour-hours (b).......... Predetermined overhead rate (a) = (b)...... $336,000 12,000 DLHS $28.00 per DLH Mercon Wurcon $10.00 $ 8.00 3.00 3.75 Direct materials ......... Direct labour ........ Manufacturing overhead applied: Unit product cost............ The unit product costs combine direct materials, direct labour, and manufacturing overhead costs: Mercon Wurcon Direct materials..... Direct labour ....... Manufacturing overhead Unit product cost... 2. The unit product costs with the proposed ABC system can be computed as follows: Estimated (b) Overhead (a) + (b) Expected Activity Cost Pool Activity Cost* Activity Rate Labour related ........ $ direct labour- hours Engineering design... $__ per direct labour-hour engineering-hours $_per engineering-hour $336,000 *The total manufacturing overhead cost is split evenly between the two activity cost pools. Manufacturing overhead is assigned to the two products as follows: Mercon: (a) (b) (a) (b) Activity Cost Pool Activity Rate Activity ABC Cost Labour related........ $_ per DLH DLHS $. Engineering design. $_ per engineering-hour engineering-hours Total........ $ Wurcon: (a) (b) (a) (b) Activity Cost Pool Activity Rate Activity ABC Cost Labour related........ $__ per DLH DLHS Engineering design $__ per engineering-hour engineering-hours $ Total