10:09 AM Wed Mar 27 91%- cvg.c eBook Exercise 4-9 ABC Overhead Calculation: Traditional vs. ABC The following overhead cost information is available for the Bright LCD Corporation, a manufacturer of computer monitors: Overhead Cost Activity Allocation Base Purchasing Number of purchase orders $400,00 Receiving Number of shipments of material 100,000 Machine setups Number of setups General Factory Direct labor hours Quality control Number of inspections 300,000 125,000 5,000 During the year, 1,000 purchase orders were issued; 300 shipments of material were received; 600 machine setups occurred; and 750 inspections were conducted. Employees worked a total of 10,000 direct labor hours on assembly of the monitors. The corporate managers are trying to decide whether they should use a traditional overhead allocation method based on direct labor (assembly) hours or switch to an activity based costing system. Assume that a batch of 200 monitors has resulted in the following cost activity: Purchase orders Shipments of material received Machine setups Direct labor assembly hours Inspections 12 50 A. Determine the overhead allocation for the batch of 200 monitors under the traditional overhead allocation bsed on direct labor hours. S 5000 B. Determine the overhead allocation for the batch under activity-based costing. Round your answer to the nearest cent. $8725 Hide Feedback