Alpha Machines manufactures single product (Product A1).The products were manufactured intwo of the cost centres.The details are as follows:

Information Machining Department Finishing Department

Production Overheads (Indirect costs) $ 1,360,000 $ 480,000

Machine Hours (total) 680,000 hours

Direct Labour Hours (total) 240,000 hours

A machine hour rate is used to absorb overhead in the machining department.The finishing department is more labour intensive therefore a labour rate is used.The other details for A1 are as follows:

Information Machining Department Finishing Department

Machine Hours(for product A1) 600,000 machine hours

Direct Labour Hours (for product A1) 176,400 labour hours

Direct Costs for Product A1:Direct Materials $ 240,000 and Direct Labour Cost $ 480,000

Required

(1) Calculate the amount of overheads for machining and finishing department using normal costing approach.

(2)Compute the total cost of Product A1 (Materials + Labour + Overheads)

(3) Explain why the costs reported under traditional costing and activity-based costing differ from one another?