(ABC; pricing; cost drivers) Believing that its traditional cost system may be providing misleading information, Dover Corporation is considering an activity-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 organization 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:

Â	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
Â	Total manufacturing overhead cost	Â	$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
Sales and production data:	$5.15
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

a. Compute the per-unit cost for this product for 2010 if Dover Corporation uses the traditional full-cost system.

b. Compute the per-unit cost for this product for 2010 if the Dover Corporation employs an activity-based costing system.

c. 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).