Question 1: Calculate the monthly quality-control cost to be assigned to the Satin Sheen product line under the Traditional product-costing system and the Activity-based product-costing system.

Assigned Costs

Tradtional Systems: __________

Activity Based Costing: __________

Question 2: Does the traditional product-costing system overcost or undercost the Satin Sheen product line with respect to quality-control costs? By what amount?

Traditional Systems ____________ (Overcost or Undercost) by ____________ (how much)

Urban Elite Cosmetics has used a traditional cost accounting system to apply quality-control costs uniformly to all products at a rate of 17 percent of direct-labor cost. Monthly direct-labor cost for Satin Sheen makeup is $110,000. In an attempt to more equitably distribute quality-control costs, management is considering activity-based costing. The monthly data shown in the following chart have been gathered for Satin Sheen makeup. Required: 1. Calculate the monthly quality-control cost to be assigned to the Satin Sheen product line under each of the following productcosting systems. a. Traditional system, which assigns overhead on the basis of direct-labor cost. b. Activity-based costing. 2. Does the traditional product-costing system overcost or undercost the Satin Sheen product line with respect to quality-control costs? By what amount