Unit-Based Versus Activity-Based Costing Fisico Company produces exercise bikes. One of its plants produces two versions: a standard model and a deluxe model. The deluxe model has a wider and sturdier base and a variety of electronic gadgets to help the exerciser monitor heartbeat, calories burned, distance traveled, etc. At the beginning of the year, the following data were prepared for this plant: Standard Model Deluxe Model Expected quantity Selling price Prime costs 30,000 15,000 $370 $700 $4.5 million $5.25 million Machine hours 37,500 37,500 Direct labor hours 75,000 75,000 Engineering support (hours) 13,500 31,500 Receiving (orders processed) 3,000 4,500 Materials handling (number of moves) 15,000 45,000 Purchasing (number of requisitions) 750 1,500 Maintenance (hours used) 6,000 24,000 Paying suppliers (invoices processed) 3,750 3,750 60 540 Setting up batches (number of setups) Additionally, the following overhead activity costs are reported: Maintenance $600,000 Engineering support 900,000 Materials handling 1,200,000 Setups 750,000 Purchasing 450,000 Receiving 300,000 Paying suppliers 300,000 $4,500,000 Required: 1. Calculate the cost per unit for each product using direct labor hours to assign all overhead costs. Standard Unit cost 225 Deluxe 500 2. Calculate activity rates. Maintenance Activity Rates 20 per hour used 2. Calculate activity rates. Maintenance Engineering support Materials handling Setups Purchasing Receiving Activity Rates 20 per hour used 20 per hour 20 per move 1,250 per setup 200 per requisition 40 per order Paying suppliers 40 per invoice Determine the overhead cost per unit. If required, round your final answers to the nearest cent. Overhead cost Standard Deluxe X per unit X per unit Compare these costs with those calculated using the unit-based method. Which cost is the most accurate? activity-based method