PROBLEM

Under a traditional job costing system, Marty understood the activities used to generate that product involved machine setup, material moves, and assembly. The selling price and costs included in primary product are presented here.

Traditional method

Direct costs per unit

Indirect costs per unit

$8\mathrm{.}00$

$4\mathrm{.}00$

MOH costs allocated per unit under ABC

Selling price per unit

$$,2\mathrm{.}50$

$16\mathrm{.}00$