Sweetheart Brands packages single-sized servings of sugar and sugar substitute for fast-food restaurants. The activities required to package sugar are fewer and less complex than for the sugar substitute. The direct costs of producing the two products are as follows:

	Sugar	Sugar Substitute
Direct materials	$ 0.02	$ 0.04
Direct labor	0.04	0.08

Overhead is currently assigned to the two products based on machine hours. The following information is provided regarding overhead costs:

Activity	Traceable Costs	Cost Driver	Sugar Line	Sugar Substitute Line	Total
Setup	$ 48,000	Number of setups	150	150	300
Packing	266,000	Number of machine hours	23,000	47,000	70,000
Inspection	36,000	Number of batches	330	470	800
	$ 350,000

Required:

1. Compute the predetermined overhead rate under the current method of overhead cost allocation. How much total overhead cost will be assigned to each product under the current system?
2. Compute the three activity rates that would be used in an activity-based system. How much total overhead cost will be assigned to each product under an ABC system?
3. Assuming an ABC system to be more precise, by how much does the company's current costing system over- or undercost the products?

a. Compute the predetermined overhead rate under the current method of overhead cost allocation. How much total overhead cost will be assigned to each product under the current system? b. Compute the three activity rates that would be used in an activity-based system. How much total overhead cost will be assigned to each product under an ABC system? c. Assuming an ABC system to be more precise, by how much does the company's current costing system over- or undercost the products? Complete this question by entering your answers in the tabs below. Compute the predetermined overhead rate under the current method of overhead cost allocation. How much total overhead cost will be assigned to each product under the current system? Note: Round your "Predetermined overhead rate" answer to 2 decimal places