ABC problem Company LSD LTD has 4 types of overhead. The four categories and expected costs for each category for next year are listed below Company LSD LTD Activity cost Setups cost $150,000 Inspection cost $90,000 Maintenance cost $120,000 Material Handling cost $ 82,000 Actual overhead Cost $30,000 Estimates for the proposed job (Job #23] are as follows Direct Materials $6,000 DL (1000 hours) $10,000 Machine Hours (maintenance cost] 500 # of material moves 12 #of setups 5 # of inspections 10 Units produced 240 The company has been asked to submit a bid for a proposed job. The plant manager thinks getting this job would result in new business in future years. Usually bids are based upon full manufacturing cost plus 30%. In the past, full manufacturing cost has been calculated by allocating overhead using volume based cost driver [[DLH). The plant manager has heard of a new way of applying overhead that uses cost pools and cost drivers. Expected activity for the four activity based cost drivers that would be used are : Cost Drivers Machine Hours 15,000 Material Moves 4,600 Setups 3,500 Quality Inspections 5,000 1 Calculate the predetermined rates using the activity based costing . 2 Determine the amount of overhead that would be applied to the proposed project if activity based drivers are used 3 Determine the total cost of the proposed job using ABC. 4 Calculate the unit cost using ABC. 5 What bid price is the company going to use according to its policy? 6 Has the company over-applied or under-applied using FBC and ABC? How did you come to this conclusion