Maizy Industries is a producer of baby products. They manufacture two main products: spit-up rags and...

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Maizy Industries is a producer of baby products. They manufacture two main products: spit-up rags and blankets. The company currently allocates manufacturing overhead to production at a rate of $5.00 per direct labor hour. In order to gain a better understanding how its products consume overhead resources, the company is considering using activity-based costing for internal planning and decision-making purposes. Two activities have been identified as generating 80% of the total budgeted manufacturing overhead. Information related to the two activities is as follows: Activity Machine Setup Inspection Cost Pool $115,000 $59,000 Cost Driver Activity Level 305 Setups 1,000 Inspection Hours The remaining overhead is attributable to general factory costs and will continue to be allocated based on direct labor hours. If one of the company's products requires 40 setups, 600 inspection hours, and 10,000 direct labor hours, is the product being overcosted or undercosted by the traditional system and by how much in total? OA. Overcosted by $482 OB. Undercosted by $482 C. Undercosted by $10,482 OD. None of the above OE. Overcosted by $10,482 Maizy Industries is a producer of baby products. They manufacture two main products: spit-up rags and blankets. The company currently allocates manufacturing overhead to production at a rate of $5.00 per direct labor hour. In order to gain a better understanding how its products consume overhead resources, the company is considering using activity-based costing for internal planning and decision-making purposes. Two activities have been identified as generating 80% of the total budgeted manufacturing overhead. Information related to the two activities is as follows: Activity Machine Setup Inspection Cost Pool $115,000 $59,000 Cost Driver Activity Level 305 Setups 1,000 Inspection Hours The remaining overhead is attributable to general factory costs and will continue to be allocated based on direct labor hours. If one of the company's products requires 40 setups, 600 inspection hours, and 10,000 direct labor hours, is the product being overcosted or undercosted by the traditional system and by how much in total? OA. Overcosted by $482 OB. Undercosted by $482 C. Undercosted by $10,482 OD. None of the above OE. Overcosted by $10,482