Activity Based Costing versus Traditional Costing Problem. Currently Manifestations industries is considering changing to an Activity Based Costing System due to increased sales, increased number of products, and a more complex manufacturing process with many activities. Manifestations Industries has the following overhead costs and cost drivers. \begin{tabular}{|cccc|} \hline Activity Cost Pools & Cost Driver & Estimated Overhead & \multicolumn{1}{c}{ Cost Driver Activity } \\ Ordering and Receiving & Orders & $150,000 & 500 orders \\ Machine Setup & Setups & $315,000 & 450 setups \\ Machining & Machine hours & $2,000,000 & 125,000MH \\ Assembly & Parts & $1,400,000 & 2,000,000 parts \\ Inspection & Inspections & $500,000 & 500 inspections \\ & & & \\ Traditional Cost Pool & Direct Labor Hours & $4,465,000 & 44,650 DL Hours \\ \hline \end{tabular} 1: Compute the total overhead costs assigned to Product A using activity based costlings Tip 1: ABC Overhead Rate = Estimated Overhead / Cost Driver Activity Tip 2: Product A Overhead = Product A activity ABC Overhead Rate 2; Compute the total overhead costs assigned to Product A using traditional costing Tip 3: Traditional Overhead Rate = Estimated Overhead / Cost Driver Activity Tip. 4: Product A Overhead = Product A activity x Traditional Overhead Rate 3: Compute and compare ABC Overhead Costs to Traditional Overhead Costs for Product A: Product A OH Costs \begin{tabular}{c|c|c} Current Traditional OH Costs & Proposed ABC OH & (b-a)Increase/(Decrease) \\ \hline (a) & (b) & \\ \hline \end{tabular}