Required information

Bunker makes two types of briefcases, fabric and leather. The company is currently using a traditional costing system with

labor hours as the cost driver but is considering switching to an activity$-$based costing system. In preparation for the

possible switch, Bunker has identified two activity pools: materials handling and setup. Pertinent data follow:

Total estimated overhead costs are $$150,000,$ of which $$110,000$ is assigned to the materials handling pool and $$40,000$ is

assigned to the setup pool.

Required:

Calculate the overhead assigned to the leather case line using the traditional costing system based on labor hours.

Calculate the overhead assigned to the leather case line using ABC.

Was the leather case over$-$ or undercosted by the traditional cost system compared to ABC?

Complete this question by entering your answers in the tabs below.

Required $1$

Calculate the overhead assigned to the leather case line using the traditional costing system based on labor hours.

Note: Do not round intermediate calculations and round your final answer to the nearest whole dollar amount.

Overhead Assigned