The firm$$s total overhead of $$13,860,000$ is subdivided as follows: manufacturing setups, $$3,024,000$; machine processing, $$8,316,000$; and product shipping, $$2,520,000.$

Required:

Compute the unit manufacturing cost of Type A and Type B storage cabinets by using the company$$s current overhead costing procedures.

Compute the unit manufacturing cost of Type A and Type B storage cabinets by using activity$-$based costing.

Is the cost of the Type A storage cabinet overstated or understated $($i$.$e$.,$ distorted$)$ by the use of machine hours to allocate total manufacturing overhead to production? By how much?

Assume that the current selling price of a Type A storage cabinet is $$360\mathrm{.}00$ and the marketing manager is contemplating a $$40$ discount to stimulate volume. Is this discount advisable?