No grade rewarded (practice only) : Bunker makes two types of briefcase, fabric and leather. The company is currently using a traditional costing system with labor hours as the cost driver but is considering switching to an activity-based costing system. In preparation for the possible switch, Bunker has identified two activity cost pools: materials handling and setup. Pertinent data follow:

Fabric Case Leather Case

Number of labor hours 15,000 10,000

Number of material moves 511 899

Number of setups 56 84

1.Calculate the overhead assigned to the leather case line using the traditional costing system based on direct labor hours.(Do not round intermediate calculations.)

2.Calculate the overhead assigned to the leather case line using ABC

3.Was the leather case over- or undercosted by the traditional cost system compared to ABC?