Wade company makes two products, Standard and Deluxe. For Traditional costing, they determine their overhead rate using machine hours. The controller has recently learned about Activity-based Costing and developed the following cost pools. Cost Pool Engineering Support Electricity Setup costs Customer Service Total Overhead Cost Driver Engineering modifications Machine Hours Batches # of customers Est. OH $ 56,250 112,500 41,250 250,000 460,000 The company's direct labor rate is $20 per directly labor hour (DLH). The following data are for the two products produced. Direct Materials Direct Labor Hours Machine hours Product A $4/unit 4 DLH/unit 3 MH/unit 175 batches 40,000 units 50 modifications 1,000 customers $92/unit Required: Batches Volume Engineering Modifications Number of customers Market price 1. Calculate the traditional costing predetermined overhead rate 2. Allocate costs under traditional costing 3. Calculate the production cost per unit under traditional costing 4. Calculate the activity rates under ABC 5. Allocate overhead costs under ABC 6. Calculate the production cost per unit under traditional costing 7. Discuss whether the company should continue using Traditional costing or switch to ABC. Product B $8/unit 5 DLH/unit 3 MH/unit 75 batches 10,000 units 25 modifications 1,000 customers $125/unit