Ivanhoe, Inc., uses a traditional product costing system to

assign overhead costs uniformly to all its packaged multigrain

products. To meet Food and Drug Administration requirements and to

assure its customers of safe, sanitary, and nutritious

food,$$Ivanhoe$$engages in a high level of quality control.

Health $$R Us assigns its quality$-$control overhead costs to all

products at a rate of$17\%$ of direct labor costs. Its direct

labor cost for the month of June for its low$-$calorie breakfast line

is $$65,000.$ In response to repeated requests from its financial

vice president,$$Ivanhoe$$s management agrees to adopt

activity$-$based costing. Data relating to the low$-$calorie breakfast

line for the month of June are as follows.

$$Activity Cost PoolsCost DriversOverhead

RateNumber of Cost

Drivers Used

per ActivityInspections of material receivedNumber of pounds$$0\mathrm{.}60$per pound$6,140$poundsIn$-$process inspectionsNumber of servings$$0\mathrm{.}31$per serving$10,100$servingsFDA certificationCustomer orders$$13\mathrm{.}00$per order$600$orders$($a$)$Compute the quality$-$control overhead cost to be assigned to the

low$-$calorie breakfast product line for the month of June $(1)$ using

the traditional product costing system $($direct labor cost is the

cost driver$),$ and $(2)$ using activity$-$based costing.Traditional product costingActivity$-$based costing$$eTextbook and MediaSave for Later$$Attempts: $0$ of $3$ used$$Submit Answer$$Using multiple attempts will impact your score$\mathrm{.}10\%$ score reduction after attempt $2($b$)$By what amount does the traditional product costing system

undercost or overcost the low$-$calorie breakfast line?$eTextbook and MediaSave for Later$$Attempts: $0$ of $3$ used$$Submit Answer$$Using multiple attempts will impact your score$\mathrm{.}10\%$ score reduction after attempt $2($c$)$Classify each of the activities as value$-$added or

non$$value$-$added.ActivitesNon$-$value$-$addedValue$-$addedNon$-$value$-$addedValue$-$addedNon$-$value$-$addedValue$-$added