LU Question 2 Zula Inc. manufactures two products: car wheels and truck wheels. The controller, recent ADU graduate, has developed the following information: Truck Estimated wheels produced 90,000 72,000 Direct labor hours per wheel 2 Total estimated overhead cost for two products Car Total 1 864,000 Currently the company uses traditional costing system to allocate MOH to products with direct labor hours as the allocation base. Controller had an "A" in ACC306 Cost Accounting course, The is not satisfied with the traditional method of allocating overhead, because he believes that most of overhead cost relate to truck wheel product line because of its complexity. He therefore develops the following three activity cost pools and related cost driver to better understand these costs: Activity cost pools Cost driver Expected use of cost drivers Estimated Car Truck Total MOH costs Setting up machines Number of set ups 1,400 4,200 5,600 $ 288,000 Assembling Direct labor hours 70,000 140,000 210,000$ 316,800 Inspection Number of inspections 7,000 16,800 23,800 $ 259,200 Requirement: 1 Compute the overhead cost assigned to the car wheels and truck wheel, assuming that direct labor hours is used to allocate overhead costs. 2 Compute the cost that assigned to both product lines, using activity-based costing approach. 3 Determine the difference and comment on the results