You are a manager at PopUp Company, who manufactures toasterovens. Your company produces two types of toaster ovens: basic anddeluxe.  PopUp Company currently uses a traditionalunit-based costing system, however, you feel strongly the companyshould switch to an activity-based costing system. You believe thischange would provide you more accurate costing information, whichwould allow for better strategic decision making.

Required:

1.Compare the traditional and activity-based costmanagement systems. Give advantages and disadvantages of each anddiscuss how these concepts will relate to PopUpCompany.

2.

PopUp Company produces twotypes of toasters, basic and deluxe. For the current period, thecompany reports the following data:
	Basic Toaster	Deluxe Toaster
Volume	20,000 units	5,000 units
Machine Hours	1,000	2,400
Batches	315	125
Engineering Modifications	20	50
Prime Costs	$20,000	$30,000
Market Price	$25 per unit	$60 per unit
Additional InformationFollows
	Costs	Driver
Engineering Support	$15,900	Modifications
Electricity	25,000	Machine Hours
Setup costs	33,900	Batches
1) Compute the manufacturingcost per unit of each toaster using the current unit-basedapproach.
Under this system costs areassigned to the toasters on the basis of machine hours.
2) Compute the manufacturingcost per unit of each toaster using an activy-based costingapproach