Question 19

Spencer Inc. is trying to decide whether to use a traditional costing system or an activity-based costing system.

Data relevant to both costing systems:

Direct materials: $76,000

Direct labour hours: 950

Direct labour rate per hour: $20

Data relevant to a traditional costing system:

The predetermined overhead rate is 210% of direct labour cost.

Activity Cost Pool Cost Driver Overhead Rate Expected Use of Cost Driver

Machining Machine hours $22per hour 680 Assembly Number of sub-assemblies $7per sub-assembly 1,220 Packaging and shipping Packaging/shipping hours $12per hour 210

Calculate the total cost assigned underatraditional costing system.

Total costs assigned :$

Calculate the total cost assigned underanactivity-based costing system.

Total costs assigned: $