The Golden State company produces two models of smartwatches, MyWatch XS and MyWatchXL. The company has been manufacturing the XL model for years. The XS model was recently introduced to cater to a new market segment. For reasons that the company was not able to understand, the companys profits have steadily declined since the introduction of the XS model, even though sales of the XS model were increasing rapidly. The company suspects that its costing system could be the source of the problem.

The system currently allocates manufacturing overhead costs to the two products using labor hours. For 2019, the company estimated that its manufacturing overhead costs would be $1 million. It expects to produce and sell 5000 units of XS and 40,000 units of XL. The XS model requires two hours of direct labor per unit while the XL requires one hour per unit. Thus, it is expected that 50,000 direct labor hours would be required in total. The XS model sells for $140 per unit. It uses $45 worth of Direct materials per unit and its direct labor cost is $ 20 per unit. The XL model sells for $80 per unit. It uses $30 worth of Direct materials per unit and its direct labor cost is $ 10 per unit.

1. Compute the predetermined overhead cost driver rate for 2019.

2. Determine the cost to manufacture (DM + DL + Overhead Applied) one unit of the XS model and one unit of the XL model.