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Jerry's Boat Builder's uses traditional costing to assign overhead uniformly to all products. To meet Coast Guard requirements and to assure product safety, Jerry's institutes

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Jerry's Boat Builder's uses traditional costing to assign overhead uniformly to all products. To meet Coast Guard requirements and to assure product safety, Jerry's institutes three quality control measures, as follows. In addition, traditional overhead costs are assigned at a rate of 20% per direct labor cost. Direct labor cost for the year 2016 is $1, 500,000. Required: (a) Compute the overhead cost using the traditional product cost method. (b) Compute the overhead cost to be assigned to the product line for the year 2016, using activity-based costing. (c) By what amount does traditional product costing under cost or over cost the quality control measures for boat building

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