Since its inception, Monterey Corporation has produced a single product, Product A24. The company added the technological capability to begin producing a second product, Product D36. Because of the success of Product D36, manufacturing has been shifting toward its production. Sales of Product D36 are now 50 percent of the total annual sales of 20,000 units, and the company is optimistic about the new product's future sales growth. Management is thrilled with the new product's initial success but concerned about the company's declining profits since the product's introduction. Suspecting a problem with the company's costing system, management hires you to investigate. In reviewing the company's records, product specifications, and manufacturing processes, you discover the following information. The company is in an extremely competitive industry in which markups are low and accurate estimates of cost are critical to success. The company presently allocates overhead costs to its products based on direct labor hours. Product D36 has complex parts that require more labor, machine time, setups, and inspections than Product A24. Total Overhead Costs are $2,016,000. Budgeted costs per unit for direct materials and labor are as follows: Direct Cost per Unit Product A24 Product D36 Direct materials $48 $48 Direct labor $30/hour X 2 hours production time $30/hour X 2.8 hours production time After carefully studying the company's overhead, you identify four different categories of overhead costs. Using your knowledge of this company and similar companies in the same industry, you estimate the total costs for each of these categories and identify the most appropriate cost driver for measuring each product's overhead consumption. Detailed information for each overhead cost category follows. Overhead Category Estimated Cost Cost Driver Use of Cost Driver Machining $1,080,000 Number of machine hours A24: 20,000 hours; D36: 80,000 hours Set-ups 456,000 Number of machine setups A24: 1,500 setups; D36: 3,500 setups Inspections 360,000 Number of inspections A24: 200 inspections; D36: 400 inspections Other Factory Overhead $120,000 Equal percentage for each product A24: 50%; D36: 50% Total Overhead $2,016,000

1-Determine the total cost per unit for D36 when overhead is assigned using the companys current overhead allocation method based on direct labor hours.

2-Determine the total cost per unit for A24 when overhead is assigned using the companys current overhead allocation method based on direct labor hours

3-Determine the total cost per unit for A24 when overhead is assigned using activity-based costing

4-Determine the total cost per unit for D36 when overhead is assigned using activity-based costing