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outgoing shipments, which are the activities' three respective cost drivers, follow.

$\backslash$table$[[$Descriptions$,$Type A$,$Type B$,$Total$],[$Setups$,140,100,240],[$Machine hours,$48,000,67,500,115,500],[$Outgoing shipments,$200,150,350]]$

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?

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Required $1$

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?

Note: Do not round intermediate calculations. Round activity based application rates, overhead application and the final answers to $2$ decimal places.

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Type A store cabinet line is

Maxey & Sons manutactures two types of storage cabinets$-$Iype A and Iype $B-$and applies manutacturing overnead to all units at the rate of $$120$ per machine hour. Production information follows.

$\backslash$table$[[$Descriptions$,$Type A$,$Type B$],[$Anticipated volume $($units$),24,000,45,000],[$Direct$-$material cost per unit,$$28,$$$42$

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