1. Considering that ABC systems typically are more accurate for internal strategic decision-making, which product is actually more profitable than it appeared under the traditional volume-based cost system?

2. Holt Headsets decides to pay for a Super Bowl ad in which a head coach calls the "Philly Special" play, but his special teams assistant coach hears "Fill the Soul" and thinks he is being told to tell the players to pray...the mistake almost costs them the game, but luckily the coach is given the Sports Model headset in time to call the correct play to win the game! Is this ad is an example of an organization-sustaining-, product-, customer-, batch-, or unit-level cost?

Holt Headsets Inc. uses a traditional volume-based costing system in which direct labor hours are the allocation base. Holt Headsets produces two different types of headsets: Regular Model, which used 40,000 direct labor hours, and Sports Model, which used 60,000 direct labor hours this year. Holt Headsets is considering switching to an ABC system to improve its internal strategic decision-making. The ABC system would split Holt Headsets total MOH cost of $400,000 across three activities: Design, Production, and Inspection. Under the traditional, volume-based costing system, the predetermined overhead rate is $4.00/direct labor hour. Under the ABC system, the cost of each activity and proportion of the activity drivers used by each model of headset as follows: Total Cost Proportion used by Regular Model Proportion used by Sports Model $50,000 30% 70% Design (Engineering Hours) Production (Direct Labor Hours) Inspection (Batches) $300,000 40% 60% $50,000 20% 80%