Smithville Industries has a traditional costing system in which it applies manufacturing overhead to its products using a predetermined overhead rate based on machine-hours (MHs). The company has two products, Manual and Power, about which it has provided the following data:

	Manual		Power
Direct materials per unit	$	27.50			$	64.90
Direct labor per unit	$	7.80			$	23.40
Annual production units		40,000				15,000

The company's estimated total manufacturing overhead for the year is $2,700,000 and the company's estimated total machine hours for the year is 70,000.

The company is considering using a variation of activity-based costing to determine its unit product costs for external reports. Data for this proposed activity-based costing system appear below:

Activities and Activity Measures	Estimated Overhead Cost
Machining support (MHs)		$	1,400,000
Setting up machines (setups)			500,000
Parts administration (part types)			800,000
Total		$	2,700,000

	Manual	Power
Machining support: MHs	20,000	50,000
Setting up machines: setups	2,000	500
Parts administration: part types	1,600	400

Required:

1. Determine the product cost per unit of each of the company's two products under the traditional costing system.
2. Determine the product cost per unit of each of the company's two products under activity-based costing system.
3. Which costing system is more accurate? How were the products miss-costed in the less accurate system?