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5. (25 pts) The manufacturing division of an electronics company uses activity-based costing. The company has identified three activities and the related cost drivers for
5. (25 pts) The manufacturing division of an electronics company uses activity-based costing. The company has identified three activities and the related cost drivers for indirect production costs Activity Activity 1 Activity 2 Activity 3 Cost Driver Direct materials cost Direct labor cost Kilowatt hours Three types of products are produced. Direct costs and cost-driver activity for each product for a month are as follo ws: Product C $125,000 $3,000 2,000 150,000 Product A Product B Direct materials cost $75,000 Direct labor cost Direct labor hours Kilowatt hours $6,000 2,000 150,000 $50,000 $1,000 1,000 200,000 Indirect production costs for the month are as follows: Activity1 $30,000 Activity 2 $20,000 Activity 3 $16000 Total $66,000 A) Compute the indirect production costs allocated to each product using the ABC system. B) Compute the indirect production costs allocated to each product using a traditional costing system. Assume indirect production costs are allocated to each product using the cost driver: direct labor hours
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