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Sunland Toys & Games, Inc. manufactures specialty toys. Sunland uses a traditional product costing system to assign overhead costs uniformly to all products. To meet
Sunland Toys & Games, Inc. manufactures specialty toys. Sunland uses a traditional product costing system to assign overhead costs uniformly to all products. To meet industry safety standards and to assure its customers of safe and durable toys, Sunland assigns its quality-control overhead costs to all products at a rate of 22% of direct labor costs. Its direct labor cost for the month of August for its toddler line of toys is $345,000. In response to repeated requests from its financial vice president, Sunland's management agrees to adopt activity-based costing Data relating to the toddler line of toys for the month of August are as follows: Activity Cost Pools Materials Inspection Assembly Line Inspection Cost Drivers Number of pounds Number of finished toys Overhead Rate $0.70 per pound $0.16 per toy Number of Cost Drivers Used per Activity 45,000 pounds 210,000 toys National Toy Association Certification Retail orders $2.00 per order 600 orders By what amount does the traditional product costing system under-cost or over-cost the toddler toy line? The traditional product costing system overhead by $
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