AQ 53 Lee Manufacturing has a traditional costing system in which it applies manufacturing overhead to its products using a predetermined overhead rate based on direct labour-hours (DLHS). The company has two products, Standard and Deluxe, about which it has provided the following data: Direct materials per unit Direct labour per unit Standard Deluxe $10.20 $50.50 $8.40 $25.20 0.4 1.2 30,000 Direct labour-hours per unit Annual production 10,000 The company's estimated total manufacturing overhead for the year is $1,464,480 and the company's estimated total direct labour-hours for the year is 24,000. The company is considering using a variation of activity-based costing (ABC) to determine its unit product costs for internal reports. Data for this proposed activity-based costing system appear below: Supporting direct labour (DLHS) Activities and Activity Measures Setting up machines (setups) Parts administration (part types) Total Estimated Overhead Cost $552,000 132,480 780,000 $1,464,480 Standard Deluxe Total Supporting direct labour 12,000 12,000 24,000 Setting up machines 864 240 1,104 Parts administration 600 960 1,560 Required: a. b. C. Determine the manufacturing overhead cost per unit of each of the company's two products under the traditional costing system. Determine the manufacturing overhead cost per unit of each of the company's two products under activity-based costing system. Explain the difference between the costs obtained from the traditional costing system and the ABC system. Which system provides a better estimate of costs? Why? AQ 54 Peck Lim Company (PLC) manufactures and sells heavy and light duty tents to various outdoor retailers. To better estimate costs, the company recently adopted an activity-based costing system. Last year, the company incurred $900 000 in overhead costs when a total of 10 000 direct labour hours were incurred. To better estimate costs, the company recently adopted an activity-based costing system. Based on an intense study of their company, the following activities, allocation bases, and percentages of overhead costs were determined: Allocation Base Activity Purchasing Number of purchase orders Inspections Number of inspections Sales Number of sales orders The number of activities for heavy and light duty tents is as follows: Heavy-duty Light-duty Number of purchase orders 5000 4000 Number of inspections Number of sales orders 3000 800 1000 400 Overhead Cost $495,000 $180.00 $225,000 During the past year, TKC accepted a customer order (order No 18) for a set of heavy-duty terlts that would require the following: Direct labour hours Number of sales orders Number of inspections Hours of machine time Number of purchase orders Required: 60 1 30 5 10 a. Using activity-based costing (ABC), calculate the overhead rates for each of the three activities. b. Using activity-based costing (ABC), how much overhead should be applied to order No 18? C How much overhead would be appli d Compare the overhead applied using traditional costing to ABC costing and comment on the impact on pricing. to be more accurate? Justify your answer.