150-percent profit? client if you wanted to cover your costs and cost? hat required $20.500 Cellcom Communications Products uses the same machinery to produce mula periodically modifies the products to meet market expectations. Engineering run also requires a unique setup for each product. Total setup production charges of $520,000 are included in manufacturing overhead. Total overhead During the year, 70,000 direct labor hours were used. The following addi- tional information was found in the company's records. All Other Units produced Direct materials cost Direct labor cost Machine hours used Direct labor hours used Number of engineering changes per year Number of production setups Product A 1,000 $240,000 $36.000 6,000 Products 100,000 $2,400,000 $ 480,000 800,000 3,000 67,000 6 24 120 50 Required: Complete each of the following requirements. a. Calculate the cost of Product A using the traditional method of overhead allocation. Estimate the product's cost using each of the following four possible allocation bases: direct materials cost, direct labor cost, machine hours, and direct labor hours. b. Calculate the cost of Product A using activity-based costing. Use machine hours to allocate any overhead not identified with a specific activity. c. How does the cost of Product A under the traditional allocation method differ from that computed using activity-based costing? Using the data d. Write a short memo explaining why you believe activity-based costing would or would not help this company