7 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 Cost Driver Activity 1 Direct materials cost Activity 2 Direct labor cost Activity 3 Kilowatt hours Three types of products are produced. Direct costs and cost-driver activity for each product for a month are as follows: Product A Product B Product C Direct materials cost $75,000 $50,000 $125,000 Direct labor cost $6,000 $1,000 $3,000 Direct labor hours 1,000 500 1,500 Kilowatt hours 150,000 200,000 150,000 Indirect production costs for the month are as follows: Activity 1 $12,000 Activity 2 20,000 Activity 3 16,000 Total $48,000 Required: 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