QUESTION 22 Sheena and Finder has been using the traditional product costing approach to assign overhead to all of its body lotions. The company MUST follow FDA regulations and is also concerned with providing customers safety and freedom from contamination. Consequently, Sheena and Finder engages in high quality control activities. Quality control overhead costs are assigned to products at a rate of 31% of direct labor costs In April, the company's direct labor cost for its body lotions is $85,900. Management of Caine and Cable has been requested by its CFO to adopt Activity Based Costing (ABC). Data related to its spices for the month of April follows below: Activity Cost Pools Cost Drivers Overhead Rate Drivers Used Inspections of materials received Number of pounds $1.02 per pound 8,000 pounds In-process inspections Number of servings $0.38 per liter 15,000 liters FDA Certification Customer orders $13.30 per order 600 orders INSTRUCTIONS Write a memo to the CFO that will indicate whether ABC is a better method of overhead allocation than the traditional for it Spices. You should indicate the overhead cost to be assigned to the Spices product line for the month of April, based on the (1) traditional method and (2) ABC Next, you should compare and contract the results of the two methods. Be very specific in presenting your comparison. Be sure s-amounts are included. Show relevant computations TT T Arial 3 (12pt) T.EE - pix