Extracts from cost information of Hebar

Corp.:

	Simple L3 Pack	Complex L7 Pack	Total
Setup cost allocated using direct laborminushours	$ 19 comma 450$19,450	$ 10 comma 550$10,550	$ 30 comma 000$30,000
Setup cost allocated using setupminushours	$ 13 comma 600$13,600	$ 16 comma 400$16,400	$ 30 comma 000$30,000

Assuming that

setupminushours

is considered a more effective cost drive for allocating setup costs than direct

laborminushours.

Which of the following statements is true ofHebar's setup costs under traditional costing?

A.

L3 pack is undercosted by $ 5 comma 850$5,850

B.

L7 pack is undercosted by $ 5 comma 750$5,750

C.

L7 pack is overcosted by $ 5 comma 850$5,850

D.

L3 pack is overcosted by $ 5 comma 850