1. Alden Company currently uses traditional costing procedures, applying $200,000 of overhead to products A and B on the basis of direct labor hours. The firm is considering a shift to activity-based costing and the creation of individual cost pools that will use direct labor hours (DLH), production setups (SU), and number of parts components (PC) as cost drivers. Data on the cost pools and respective driver volumes follow.

Product	Pool No. 1 (Driver: DLH)	Pool No. 2 (Driver: SU)	Pool No. 3 (Driver: PC)
A	400	25	1,900
B	600	75	1,100
Pool Cost	$40,000	$70,000	$90,000

a. The overhead cost allocated to product A by using traditional costing procedures would be:

b. The overhead cost allocated to product B by using traditional costing procedures would be:

c. The overhead cost allocated to product A by using activity-based costing procedures would be:

d. The overhead cost allocated to product B by using activity-based costing procedures would be:

2. The controller for Turner Supply Company has established the following overhead cost pools and cost drivers:

Overhead Cost Pool	Budgeted Overhead Cost	Cost Driver
Machine setups	$100,000	Number of setups
Material handling	50,000	Units of raw material
Quality control inspection	37,500	Number of inspections
Other overhead costs	100,000	Machine hours
Total	$287,500
Overhead Cost Pool	Budgeted Level for Cost Driver	Overhead Rate
Machine setups	100 setups	$1,000 per setup
Material handling	50,000 units	$1 per unit
Quality control	1,000 inspections	$37.50 per inspection
Other overhead	20,000 machine hours	$5 per machine hour

Order no. 542 has the following production requirements:

Machine setups	4 setups
Raw material	10,000 units
Inspections	10 inspections
Machine hours	500 machine hours

Required:

a. Compute the total overhead that should be assigned to order no. 542 by using activity-based costing.

b. Suppose that Turner were to use a single, predetermined overhead rate based on machine hours. Compute the rate per hour and the total overhead assigned to order no. 542. Typed in word format.