LO.3 & LO.5 (ABC; pricing; cost drivers) Believing that its traditional cost system may be providing misleading information, Dover Corporation is considering an activ- ity-based costing (ABC) approach. Dover Corporation employs a full-cost system and has been applying its manufacturing overhead on the basis of machine hours. The orga- nization plans on using 50,000 direct labor hours and 30,000 machine hours in 2010. The following data show the manufacturing overhead that is budgeted:  

	Activity	Budgeted Cost Driver	Budgeted Activity Cost
Material handling	Number of parts handled	6,000,000	$  720,000
Setup costs	Number of setups	750	315,000
Machining costs	Machine hours	30,000	540,000
Quality control	Number of batches	500	225,000
	Total manufacturing overhead cost		$1,800,000

Cost, sales and production data for one of the company’s products for the coming year are as follows:   Direct material cost per unit            $4.40 Direct labor cost per unit (.05 DLH @ $15 per DLH)              0.75 $5.15   Sales and production data: Expected sales    20,000 units Batch size             5,000 units Setups  2 per batch Total parts per finished unit             5 parts Machine hours required   80 MH per batch  
            CIA adapted Compute the per-unit cost for this product for 2010 if Dover Corporation uses the traditional full-cost system. Compute the per-unit cost for this product for 2010 if the Dover Corporation employs an activity-based costing system. Assume the company wishes to achieve a gross profit rate of 40 percent. Determine the selling price that would be required based on your answers to (a) and (b).