Mahal Co. produces two products?standard and deluxe?and allocates its fixed manufacturing costs using a predetermined overhead rate based on estimated total overhead for the year and estimated machinehours for the year. The estimates are as follows:

Estimated total overhead for the year . . . . . . . . . . . . . . . . . . .. . $2,000,000Estimated total machine-hours to be worked in the year . . . . . . . . 20,000

The controller is not sure that the estimated costs of the two products reflect the actual costs for which each product is responsible. She is thinking about switching to ABC. The accounting department came up with the following information about activities and associated cost drivers for the two products:

The following data pertain to Mahal for October, the most recent month:

Required:

Prepare an analysis of the overhead costs allocated to the standard and deluxe products for October, using the ABC method.

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Estimated Activity Cost Estimated Volume of Activity Measure Activity Measure Quantity of materials (kilograms) Number of machine setups Inspection-hours Machine-hours Activity Materials purchasing 100,000 kilograms $200,000 Machine setups 400 setups 4,000 hours 20,000 MHs 800,000 400,000 Inspection Machine operations 600,000 Standard Product Purchasing materials. Machine setups . Inspection ..... Machine operations.. 6,000 kilograms 10 200 hours 1,500 hours Deluxe Product 4,000 kilograms 30 200 hours 500 hours