Swanson Corp

Multiple Choice

Swanson Corp. manufactures and sells decorative bird feeders and birdhouses to local vendors. As a new business, they are trying to determine how to appropriately cost their items and have narrowed the choices to a traditional costing system and Activity-Based Costing (ABC) system. Their Direct Materials (DM) include (same for both products) : Concrete, $12,500 and wood, $23,620. Their Direct Labor (DL) includes (same for both products) : Wages (assembly line worker) , $58,900, and Wages (painter) , $42,850. Under a traditional costing system, their Manufacturing Overhead (MOH) would be 88% of their direct labor costs. If they decide to go with ABC, then they have identified the following key activities and costs: property tax, $18,400 ($1.50 per square foot) ; wages (supervisor) , $56,800 ($7.10 per hour) ; and cleaning, $24,700 ($3.81 per hour) . Swanson intends to stick to the following production schedule:
Bird feeders: 18,640 units; 8,100 square feet; 5,230 supervisor hours; and 3,900 cleaning hours.
Birdhouses: 12,307 units; 4,150 square feet; 2,770 supervisor hours; and 2,580 cleaning hours.
Under traditional costing, the total product cost for a birdhouse is $18.48. If Swanson chooses to use an ABC system instead of traditional costing system, then what is the difference in total cost per unit for the birdhouses?
Seems long for a multiply choice problem.
I updated this question to provide traditional cost per unit. This reduces the amount of work needed to do the comparison.

A) Total cost in Traditional costing is $1.38 higher than ABC.
B) Total cost in Traditional costing is $1.38 lower than ABC.
C) Total cost in Traditional costing is $4.37 higher than ABC.
D) Total cost in Traditional costing is $4.37 lower than ABC.