1. Calculate the cost of a Regular widget in 2020 using the traditional costing system.
2. Calculate the cost of a Regular widget in 2020 using the ABC system.
3. Explain why your results differ in questions 7 and 8. Be specific.
4. What characteristics of Company DEF suggest that changing to an ABC system might benefit it? Which costing system do you recommend Company DEF use? Why

	Cost allocation base	Indirect in cost
Product desgin	number of components	107200
Machine set up	hour	401620
Assembly	machine hour	594080
Inspection	number of product	160460

The accounting department has also compiled the following data by product line for 2020:

	Simple	Regular	Deluxe
number component	4	10	18
set up hour	75	125	300
machine hour	0.75	1.25	2
number of product	1320	2650	7330
DM	6	12	20
DL hour per unit	2	3.5	5
DL cost per hour	12	12	12
unit produced	21040	26200	13335

Company DEF makes three types of widgets: Simple, Regular, and Deluxe. The company currently uses a traditional costing system with one indirect cost pool and machine hours as its allocation base; however, it is considering whether it should implement an activity-based costing (ABC) system in 2020. The accounting department has studied the indirect cost pool and developed the following cost pool data for use in an ABC system in 2020: