Carter, Incorporated, produces two products, Product A and Product B$.$ Carter uses a traditional volume$-$based costing system in which

direct labor hours are the allocation base. Carter is considering switching to an ABC system by splitting its manufacturing overhead

cost across three activities: Design, Production, and Inspection. The cost of each activity and usage of the cost drivers are as follows:

Carter manufactures $10,000$ units of Product A and $7,500$ units of Product $B$ per month.

Required:

a$.$ Calculate the predetermined overhead rate under the traditional costing system.

b$.$ Calculate the activity rate for Design.

c$.$ Calculate the activity rate for Machining.

d$.$ Calculate the activity rate for Inspection.

e$.$ Calculate the indirect manufacturing costs assigned to each unit of Product A under the traditional costing system.

f$.$ Calculate the indirect manufacturing costs assigned to each unit of Product B under the traditional costing system.

g$.$ Calculate the indirect manufacturing costs assigned to each unit of Product A under the ABC system.

h$.$ Calculate the indirect manufacturing costs assigned to each unit of Product B under the ABC system.

i$.$ Which product is undercosted and which is overcosted under the volume$-$based cost system compared to ABC?

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