ADDA Ltd., manufactures motors and compressors. ADDA has been accumulating manufacturing overhead costs into one cost pool, and charged $250 overhead cost to each unit of product. ADDA made 4,200 units of motors and 2,800 units of compressors last year. The cost accountant believes that there are significant differences in how each product line uses resources, and is considering using the ABC costing method to allocate the manufacturing overhead costs. She analyzes the manufacturing overhead costs and gathers the following information:

Activity Costs	Cost Driver
50% of the overhead costs is for machine amortization	Number of units
30% of the overhead costs is for inspections	Number of inspections
20% of the overhead costs is for design	Number of designs

The Motor Department has inspected 850 times and 20 designs done, while the Compressor Department has inspected 1,250 times and 50 designs done.

1. Calculate the total manufacturing overhead costs allocated to the Motor Department, using the traditional method:$

2. Calculate the total manufacturing overhead costs allocated to the Compressor Department, using the traditional method:$

3.

	Motor Department	Compressor Department
Which department was over-allocated the overhead costs using the traditional method?	a. over allocated b. correctly allocated c. under allocated	a. over allocated b. correctly allocated c. under allocated