World Company manufactures two products, Product X and Product Z. The company estimates it will incur $100,000 of manufacturing overhead for the current period. Overhead currently is assigned to the products using direct labor hours. Data concerning the current periods operations under the traditional system are:

	Product X	Product Z
Estimated volume in units	400	1500
Direct labor hours per unit	0.7	1.2
Direct materials cost per unit	$10.50	$16.75
Direct labor cost per unit	$11.25	$20
Manufacturing overhead cost per unit*	$33.66	$57.70

Using direct labor hours as the allocation base: 400 units x 0.7 direct labor hours per unit + 1,500 units x 1.2 direct labor hours per unit = 2,080 estimated direct labor hours; $100,000 estimated manufacturing overhead/2,080 direct labor hours (DLH) = $48.08 per DLH; $48.08 x 0.70 = $33.66 and $48.08 x 1.20 = $57.70.

In order to compute estimated cost under activity-based costing, the company has identified two activity cost pools, broken down the estimated overhead, and estimated activity levels as follows:

	estimated overhead	Estimated Activity
activity cost pool		Product x	Product z	total
set up machines	20,000	200	300	500
prepare purchase orders	80,000	900	900	1,400
total	100,000