Escuha Company produces two type of calculators: scientific and business. Both products pass through two producing departments. The business calculator is by far the most popular. The following data have been gathered for these two products:

Product-Related Data
Scientific Business
Units produced per year 75,000 750,000
Prime costs $235,000 $2,350,000
Direct labor hours 97,800 978,000
Machine hours 50,600 506,000
Production runs 100 150
Inspection hours 2,000 3,000
Maintenance hours 2,250 9,000
Department Data
Department 1 Department 2
Direct labor hours:
Scientific calculator 72,900 24,900
Business calculator 97,800 880,200
Total 170,700 905,100
Machine hours:
Scientific calculator 25,200 25,400
Business calculator 393,120 112,880
Total 418,320 138,280
Overhead costs:
Setup costs $236,000 $236,000
Inspection costs 170,000 170,000
Power 244,000 134,000
Maintenance 210,000 228,750
Total $860,000 $768,7501) Compute the overhead cost per unit for each product using a plantwide, unit-based rate
using direct labor hours.

2) Compute the overhead cost per unit for each product using departmental rates. In
calculating departmental rates, use machine hours for Department 1 and direct labor hours
for Department 2. Repeat using direct labor hours for Department 1 and machine hours for
Department 2.

3) Compute the overhead cost per unit for each product using activity-based costing.

4) Comment on the ability of departmental rates to improve the accuracy of product costing.