QUESTION 2 The job costing system at Sheri's Custom Framing has five indirect-cost pools (purchasing, material handling, machine maintenance, product inspection, and packaging). The company is in the process of bidding on two jobs: Job 215, an order of 15 intricate personalized frames, and Job 325, an order of 6 standard personalized frames. The controller wants you to compare overhead allocated under the current simple job-costing system and a newly designed activity-based job-costing system. Total budgeted costs in each indirect cost pool and the budgeted quantity of activity driver are as follows: Purchasing Material handling Machine maintenance Budgeted Overhead Activity Driver $35,000 Purchase orders processed 43,750 Material moves 118,650 Machine-hours Budgeted Quantity of Activity Driver 2,000 5,000 10,500 2 Product inspection 9,450 Inspections 1,200 Packaging 19,950 Units produced 3,800 $226,800 Information related to Job 215 and Job 325 follows. Job 215 incurs more batch-level costs because it uses more types of materials that need to be purchased, moved, and inspected relative to Job 325. Job 215 Job 325 25 10 40 Number of purchase orders Number of materials moves Machine-hours Number of inspections Units produced Required: 8 4 60 3 6 9 15 1. Compute the total overhead allocated to each job under a simple costing system, where overhead is allocated based on machine-hours. 2. Compute the total overhead allocated to each job under an activity-based costing system using the appropriate activity drivers. 3. Explain why Sheri's Custom Framing might favor the ABC job-costing system over the simple job-costing system, especially in its bidding process. 4. What advantages does ABC costing system have over traditional costing systems and what are some of the problems associated with using ABC costing system