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Q2. As mentioned in the Feature Story, Precor manufactures a line of high-end exercise equipment of commercial quality. Assume that the chief accountant has proposed changing from a traditional costing system to an activity-based costing system. The financial vice president is not convinced, so she requests that the next large order for equipment be costed under both systems for purposes of comparison and analysis. An order from Slim-Way Salons, Inc., for 150 low-impact treadmills is received and is identified as the order to be subjected to dual costing. The following cost data relate to the Slim-Way order. Data relevant to both costing systems Direct materials $55,500 Direct labor hours 820 Direct labor rate per hour $ 18.00 Data relevant to the traditional costing system Predetermined overhead rate is 300% of direct labor cost. Data relevant to the activity-based costing system Expected Use of Activity-Based Cost Drivers Activity Cost Pools Cost Drivers Overhead Rate for Treadmill Order Engineering design Engineering hours $30 per hour 330 Machine setup Setups $200 per setup 22 Machining Machine hours $25 per hour 732 Assembly Number of subassemblies $8 per subassembly 1,500 Packaging and shipping Packaging/shipping hours $15 per hour 152 Building occupancy Machine hours $6 per hour 732 Instructions Compute the total cost of the Slim-Way Salons, Inc. order under (a) the traditional costing system and (b) the activity-based costing system. (c) As a result of this comparison, which costing system is Precor likely to adopt? Why