Setup costs for XYZ's two products amounted to $2,000. The company used 1,200 direct labor hours to produce product A and 2,000 direct labor hours to produce product B. Both products required the same number of setups. If XYZ uses traditional costing system to allocate setup costs, then$750 will be allocated to A and $1,250 will be allocated to B. However, $1,000 will be allocated to A and B if activity based costing is used. Comparing the allocation using the traditional costing to activity based costing:

	a.	Product A is overcosted by $1,250 under traditional costing.
	b.	Product B is undercosted by $500 under traditional costing.
	c.	Product A is undercosted by $750 under traditional costing.
	d.	Product B is overcosted by $250 under traditional costing.