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Swenson Company manufactures 4,000 units of Deluxe Product and 20,000 units of Regular Product each year. The company currently uses direct labor-hours to assign overhead

Swenson Company manufactures 4,000 units of Deluxe Product and 20,000 units of Regular Product each year. The company currently uses direct labor-hours to assign overhead cost products. The predetermined overhead rate has been calculated as: Manufacturing overhad cost = $20 DLH Direct labor hour Other information shows: Direct materials deluxe $40 regular $30 Direct labor deluxe 20 regular 15 Factory Overhead: 2.5 DLH x $20 DLH deluxe $50 regular $0 2.0 DLH x $20 DLH deluxe 0 regular 40 Total cost per unit deluxe $110 regular $85 Suppose, however, that factory overhead costs are actually caused by the five activities listed below: Activity Costs Machine Setup $300,000 Quality Inspections $200,000 Production orders 90,000 Machine Hours worked 330,000 Material receipts 80,000 TOTAL $1,000,000 Also suppose the following transaction data has been collected: Machine setups deluxe 3,000 regular 2,000 Quality inspect. deluxe 5,000 regular 3,000 Prod. Orders deluxe 200 regular 400 Mach Hrs. worked deluxe 10,000 regular 23,000 Material recpts deluxe 200 regular 600 Required: a) Use the activity based costing method to calculate unit costs of Deluxe and Regular products

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