TB Problem 5-164 (Algo) Sweetheart Brands packages single-sized... 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: Direct materials Direct labor Sugar $ 0.02 0.04 Sugar Substitute $ 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 Setup Packing Inspection $ 58,000 164,000 28,000 $ 250,000 Number of setups Sugar Line 145 Sugar Substitute Line 145 Total 290 Number of machine hours Number of batches 16,000 230 34,000 330 50,000 560 Required: 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. Required A Required B Required C ook ences Required: 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. Required A Required B Required C Assuming an ABC system to be more precise, by how much does the company's current costing system over- or undercost the products? Sugar 12,980 Sugar substitute Undercosted Remains the same