MOH-60% MO H31. oo Aoyo Mo 31 .a0o MOH 7 8OO Hady Corp. is considering the adoption of an activity-based costing (ABC) system because the managers suspect that their traditional costing system distorts the product costs. This company produces and sells only two products X23Win and Y75All. Their traditionall costing system uses direct lahor.cast as the allocation base for manufacturing overhead cost. The production managers decided that major activities are Machine setups, Special Processing, and General factory and determined the costs for each activity. They also identified how many setups, MHs, and DLHS each product requires. Product X23Win Y75A Price 350 475 DM $57.00 $82.00 DLHS/unit 1.0 Units L000 2,000 4 c oC 2.0 The wage rate per hour is The company collected the data for ABC as follows: 60.00 Activity Cost Pool Cost Driver or Activity Measure of setups Estimaled OH cost Machine setup Special processing General factory $38,760/8 Yl 49,500 /12OOO Machine hours 90.240 Direct-labor hours S178,500 Total Activity Measure # of setups Machine hours X23Win Y75Al 40 80 6,000 12,000 Relative to the traditional costing system, the product cost for Y75A11: Under the ABC system is lower by B. 4.20 per unit. 4.20 per unit. Under the ABC system is higher by Under the ABC system is lower by Under the ABC system is higher by 3.70 per unit. 3.70 per unit D. None of the above E. 2.000 178.500 1 0,000-1.4875 Foo po003,71875 495X18a00/Digoa37.15