A Ing @ E4.10 (LO 1, 2, 3), AP Kragan Clothing Company manufactures its own designed and labeled athletic wear and sells its products through catalog sales and retail outlets. While Kragan has for years used activity-based costing in its manufacturing activities, it has always used traditional costing in a its selling costs to its product lines. Selling costs have traditionally been assigned to Kragan's t lines at a rate of 70% of direct materials costs. Its direct materials costs for the month of March Kragan's "high-intensity" line of athletic wear are $400,000. The company has decided to extend activity-based costing to its selling costs. Data relating to the "high-intensity" line of products for the month of March are as follows. Assign overhead using traditional costing and ABC. Activity Cost Pools Sales commissions Advertising-TV Advertising-Internet Cost Drivers Dollar sales Minutes Overhead Rate $0.05 per dollar sales Number of Cost Drivers Used per Activity $900,000 $300 per minute 250 Column inches $10 per column inch 2,000 Catalogs Catalogs mailed $2.50 per catalog 60,000 Cost of catalog sales Catalog orders $1 per catalog order 9,000 Credit and collection Dollar sales $0.03 per dollar sales 900,000 Instructions a. Compute the selling costs to be assigned to the "high-intensity" line of athletic wear for the month of March (1) using the traditional product costing system (direct materials cost is the cost driver), and (2) using activity-based costing. b. By what amount does the traditional product costing system undercost or overcost the "high- intensity" product line relative to costing under ABC?