l Exercise 5-26 Volume-Based Cost Driver versus ABC {Mi LO 5-1,|1_4i 5-2,|1_-'u'i 5-4) Tioga Company manuactures sophisticated lenses and mirrors used in large optical telescopes. The company is now preparing its annual prot plan. As part of its analysis oftlte protability 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 25 25 Material moves per product line 5 15 Direct-labor hours per unit 200 200 The total budgeted material-handling cost is 3.50.000. Required: 1. Under a costing system that allocates overhead on the basis ofdirect-labor hours, the materialhandling costs allocated to one lens would be what amount? 2. Answer the same question as in requirement 1. but for mirrors. 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. Answer the same question as in requirement 3, but for mirrors. I Exercise 5-27 Activity-Based Costing; Quality Control Costs (I Lo 5-1, 5-2, 5-4) Urban Elite Cosmetics has used a traditional cost accounting system to apply qualitycontrol costs uniformly to all products at Page 203 a rate of I45 percent ofdirectlabor cost. Monthly directlabor cost for Satin Sheen makeup is $21500. In an attempt to more equitably distribute qualitycontrol costs, management is considering activitybased costing. The monthly data shown in the following chart have been gathered for Satin Sheen makeup. Quantity of Driver Activity Cost Pool Cost Driver Pool Rates for Satin Sheen Incoming material inspection Type of material $11.50 per type 12 types lnprocess inspection Number of units .14 per unit 17,500 units Product certification Per order 77.00 per order 25 orders Required: 1. Calculate the monthly quality-control cost to be assigned to the Satin Sheen product line under each ofthe following productcosting systems. {Round to the nearest dollar.) a. Traditional system. which assigns overhead on the basis ofdirect-Iabor cost. 5. Activitybased costing. 2. Does the traditional productcosting system overcost or undercost the Satin Sheen product line with respect to qualitycontrol costs? By What amount