14. The Samantha Manufacturing Company produces 1,000 units of Product A and 1,000 units of Product B. Currently, it uses a traditional cost system using direct labor hours, but is considering an activity-based cost system. It wants to know what the cost of inspection would be for both products assuming the following:

Product A

Product B

Total

Number of inspections

2

10

12

Cost per inspection

$1,000

$1,000

$12,000

Direct labor hours per unit

3

2

5,000

REQUIRED (30 points):

a.

Under traditional costing, how much of the $12,000 inspection costs would be allocated to Product A and Product B, respectively?

b.

Using activity-based costing, how much of the $12,000 inspection costs would be allocated to Product A and Product B, respectively?