Summer Daze Corporation manufactures two products, Bocce Ball Sets and Croquet Sets. Croquet Sets ...

Summer Daze Corporation manufactures two products, Bocce Ball Sets and Croquet Sets. Croquet Sets were added as a product line two years ago. Croquet Sets are the more complex of the two products, requiring one hour of direct labour time per unit to manufacture, compared to one-half hours of direct labour time for Bocce Ball Set. Croquet Sets are produced on an automated production line.

Indirect costs are currently allocated to the products on the basis of direct labour hours. The company estimated it would incur $332,500 in manufacturing overhead costs and produce 6,000 units of Croquet Sets and 20,000 units of Bocce Ball Sets during the current year.

Unit costs for materials and direct labour are:

   Bocce Ball Set   Croquet Set
Direct labour   $9   $18
Direct materials   $12   $16

Indirect costs are:
      Estimated   
   Estimated   Activity   Estimated
   Indirect   Bocce Ball   Activity   
   Costs   Sets   Croquet Sets   Total
Activity cost pools/drivers:
Machine setups   $153,000   700   1,000   1,700
Purchase orders   27,500   300   200   500
Machine hours   128,000   5,000   11,000   16,000
Maintenance requests   24,000   200   300   500
    Total   $332,500

Required:
a.   Determine the unit cost of a Bocce Ball Set using traditional (simple) costing with units as the allocation base.
b.   Determine the unit cost of a Bocce Ball Set using activity-based costing.