A company produces and sells two products. Recently, product A, which the company has made successfully for a long time, has seen a downturn in market demand while product B, a relatively new addition to the company, seems to be quite profitable and sales are higher than predicted. The company traditionally has used machine hours to allocate indirect product costs, but because of the unexpected demand patterns for the two products, the company has analyzed its indirect costs and identified six indirect cost activity pools. Cost and driver information for these activity pools is as follows:

1. 1. How much of the indirect cost would have been applied to product A under the simple costing method using machine hours as the allocation base?
2. 2. How much of the indirect cost would have been applied to product B under the simple costing method using machine hours as the allocation base?
3. 3. Using an activity-based costing system, how much of the indirect costs are allocated to product A?
4. 4. Using an activity-based costing system, how much of the indirect costs are allocated to product B?

Cost per Activity Cost of Activity Cost Driver Total Driver Driver Production scheduling Material handling Machine setup Assembly Inspection Total indirect costs $ 304,128.00 Production runs $ 160,704.00 Material moves $ 90,288.00 Machine setups $ 216,000.00 Machine hours $ 33,264.00 Number of inspections $ 804,384.00 192 $ 1,584.00 432 372.00 342 $ 264.00 18,000 $ 12.00 792 $ 42.00 Usage of Driver Product A Product B 72 120 126 306 72 270 9,900 8,100 480 312