Bunker makes two types of briefcase, fabric and leather. The company is currently using a traditional costing system with labor hours as the cost driver but is considering switching to an activity-based costing system. In preparation for the possible switch, Bunker has identified two activity cost pools: materials handling and setup. Pertinent data follow:

	Fabric Case		Leather Case
Number of labor hours	18,000		13,000
Number of material moves	700		1,050
Number of setups	40		160

1) Calculate the overhead assigned to the fabric case using the traditional costing system based on direct labor hours.

2) Calculate the overhead assigned to the fabric case using ABC.

3) Was the fabric case over- or undercosted by the traditional cost system compared to ABC?