Perdon Corporation manufactures safeslarge mobile safes and large walk-in stationary

bank safes. As part of its annual budgeting process, Perdon is analyzing the profitability

of its two products. Part of this analysis involves estimating the amount of overhead

to be allocated to each product line. The information shown below relates to overhead.

Mobile Walk-In

Safes Safes

Units planned for production 200 50

Material moves per product line 300 200

Purchase orders per product line 450 350

Direct labor hours per product line 800 1,700

The total estimated manufacturing overhead was $260,000. Under traditional costing (which assigns overhead on the basis of direct labor hours), what amount of manufacturing overhead costs are assigned to:

One mobile safe?

One walk-in safe?

The total estimated manufacturing overhead of $260,000 was comprised of $160,000 for material handling costs and $100,000 for purchasing activity costs. Under activity-based costing (ABC):

What amount of material handling costs are assigned to:

One mobile safe?

One walk-in safe?

What amount of purchasing activity costs are assigned to:

One mobile safe?

One walk-in safe?

Compare the amount of overhead allocated to one mobile safe and to one walk-in safe under the traditional costing approach versus under ABC.