Pelles, Inc. produces two different products, Product A and Product B. Pelles uses a traditional volume-based costing system in which direct labor hours are the allocation base. Pelles is considering switching to an ABC system by splitting its manufacturing overhead cost of $1,000,000 across three activities: Design, Production, and Inpsection. Under the traditional volume-based costing system, the predetermined overhead rate is $2.50/direct labor hour. Under the ABC system, the rate for each activity and usage of the activity drivers are as follows (5 points):

	Activity Rate	usage by Product A	usage by Product B
Design (Engineering hours)	$600/hour	200	300
Production (Direct Labor Hours)	$1.25	100,000	300,000
Inspection (Batches)	$500	300	100

Required: a. Calculate the indirect manufacturing costs assigned to Product A under the traditional costing system. (Predetermined Overhead rate*Direct Labor Hour Per Unit) 2.50 X (100,000/

b. Calculate the indirect manufacturing costs assigned to Product B under the traditional costing system.

c. Calculate the indirect manufacturing costs assigned to Product A under the ABC system.

d. Calculate the indirect manufacturing costs assigned to Product B under the ABC system.