Exercise 5-26 VolumeBased Cost Driver versus ABC {LO 5-1, 5-2, 5-4) Tioga Company manufactures sophisticated lenses and mirrors used in large optical telescopes. The company is now preparing its annual prot plan. As part of its analysis ofthe profitability of individual products, the controller estimates the amount of overhead that should be allocated to the individual product lines from the following information. Lenses Mirrors Units produced 27 2? Material moves per product line 1? Ir' Direct-tabor hours per unit 236I 238 The total budgeted material-handling cost is $108,000. Required: 1. Under a costing system that allocates overhead on the basis of direct-labor hours, the material-handling costs allocated to one lens would be what amount? 2. Under a costing system that allocates overhead on the basis of direct-labor hours. the material-handling costs allocated to one mirror would be what amount? 3. Under activity-based costing {ABC}, the material-handling costs allocated to one lens would be what amount? The cost driver for the material-handling activity is the number of material moves. 4. Under activity-based costing [ABC], the material-handling costs allocated to one mirror would be what amount? The cost driver for the material-handling activity is the number of material moves. (For all requirements. do not round your intermediate calculations and round your nal answers to the nearest whole dollarJ Materialha ndling cost per lens Materialha ndlin. cost per mirror Materialha ndling cost per lens Material-ha ndling cost per mirror Urban Elite Cosmetics has used a traditional cost accounting system to apply quality-control costs uniformly to all products at a rate of 17 percent of direct-labor cost. Monthly direct-labor cost for Satin Sheen makeup is $98,000 In an attempt to more equitably distribute quality-control costs, management is considering activity-based costing. The monthly data shown in the following chart have been gathered for Satin Sheen makeup. Quantity of Drive r Activity Cost Poo'l. Cost Driver Poo'L Rates for Satin Sheen Incoming material inspection Type of material $ 23.39! per type 23 types In-process inspection Number of units 8.25 per unit 33,008 units Product certification Per order 146.53 per order m orders Required: 1. Calculate the monthly quality-control cost to be assigned to the Satin Sheen product line under each ofthe following product- costing systems a. Traditional system, which assigns overhead on the basis of direct-labor cost b. Activity-based coating 2. Does the traditional product-costing system overcost or undercost the Satin Sheen product line with respect to quality-control costs? By what amount? Complete this question by entering your answers In the tabs below. Required 1 Required 2 Calculate the monthly quality-control cost to be assigned to the Satin Sheen product line under the Traditional product-costing system and the Activity-based product-costing system. Traditional system b. Activity-based costing Urban Elite Cosmetics has used a traditional cost accounting system to apply quality-control costs uniformly to all products at a rate of 17 percent of direct-labor cost. Monthly direct-labor cost for Satin Sheen makeup is $98,000. In an attempt to more equitably distribute quality-control costs, management is considering activity-based costing. The monthly data shown in the following chart have been gathered for Satin Sheen makeup. Quantity of Drive r Activity Cost Pool Cost Driver Poo'L Rates for Satin Sheen Incoming material inspection Type oi" material $ 23.\") per type 23 types In-process inspection Number of units 8.25 per unit 33,003 units Product certification Per order 146.30 per order ".r'B orders Required: 1. Calculate the monthly.r quality-control cost to be assigned to the Satin Sheen product line under each ofthe following product- costing systems. a. Traditional system, which assigns overhead on the basis of direct-labor cost. b. Activity-based costing; 2. Does the traditional product-costing system overcost or undercost the Satin Sheen product line with respect to quality-control costs? By what amount? Complete this question by entering your answers In the tabs below. Required 1 Required 2 Does the traditional product-costing system overcast or undercost the Satin Sheen product line with respect to quality-control costs? By what amount? _:-:I