Exercise 5.28 a-c Lim Clothing Company manufactures its own designed and labelled sports attire and sells its products through catalogue sales and retail outlets. While Lim has used activity-based costing in its manufacturing activities for years, it has always used traditional costing in assigning its selling costs to its product lines. Selling costs have traditionally been assigned to Lim's product lines at a rate of 80% of direct material costs. Its direct material costs for the month of March for Lim's "high-intensity" line of attire are $400,000. The company has decided to extend activity-based costing to its selling costs. Data relating to the high-intensity line of products for the month of March are as follows: Activity Cost Pools Sales commissions Advertising-TV/Radio Advertising-Newspaper Catalogues Cost of catalogue sales Credit and collection Cost Drivers Dollar sales Minutes Column inches Catalogues mailed Catalogue orders Dollar sales Overhead Rate $0.06 per dollar sales $270.00 per minute $8.00 per column inch $2.50 per catalogue $1.00 per catalogue order $0.04 per dollar sales Number of Cost Drivers Used per Activity $945,500 240 1,920 5,560 8,730 $945,500 Calculate the selling costs to be assigned to the high-intensity line of attire for the month of March using 1. The traditional product costing system (direct material cost is the cost driver) Selling costs to be assigned s 2. Activity-based costing. Selling costs to be assigned s By what amount does the traditional product costing system undercost or overcost the high-intensity product line? Traditional product costing system the high-intensity product line by $ Classify each of the activities as value-added or non-value-added. Activity Cost Pools Sales commissions Advertising-TV/Radio Advertising-Newspaper Catalogues Cost of catalogue sales Credit and collection