The following overhead cost information is available for the Bright LCD Corporation, a manufacturer of computer monitors: Activity Purchasing Receiving Machine setups Assembly Quality control Allocation Base Overhead Cost Number of purchase orders $400 000 Number of shipments of material 100 000 Number of setups 300 000 Direct labour hours 125 000 Number of inspections 75 000 During the year, 1000 purchase orders were issued; 300 shipments of material were received; 600 conducted. Employees worked a total of 10 000 direct labour hours on assembly of the monitors. The corporate managers are trying to decide whether they should use a traditional overhead allocation method based on direct labour (assembly) hours, or switch to an activity-based costing system. Assume that a batch of 200 monitors has resulted in the following cost activity: 7 12 Purchase orders Shipments of material received Machine setups Direct labour assembly hours Inspections 2 50 3 Required a) Determine the overhead allocation for the batch of 200 monitors under the traditional overhead allocation based on direct labour hours. (4 marks) b) Determine the overhead allocation for the batch under activity-based costing. (6 marks) c) Write any three advanatages and two limitations of Activity based Costing. (5 marks) The following overhead cost information is available for the Bright LCD Corporation, a manufacturer of computer monitors: Activity Purchasing Receiving Machine setups Assembly Quality control Allocation Base Overhead Cost Number of purchase orders $400 000 Number of shipments of material 100 000 Number of setups 300 000 Direct labour hours 125 000 Number of inspections 75 000 During the year, 1000 purchase orders were issued; 300 shipments of material were received; 600 conducted. Employees worked a total of 10 000 direct labour hours on assembly of the monitors. The corporate managers are trying to decide whether they should use a traditional overhead allocation method based on direct labour (assembly) hours, or switch to an activity-based costing system. Assume that a batch of 200 monitors has resulted in the following cost activity: 7 12 Purchase orders Shipments of material received Machine setups Direct labour assembly hours Inspections 2 50 3 Required a) Determine the overhead allocation for the batch of 200 monitors under the traditional overhead allocation based on direct labour hours. (4 marks) b) Determine the overhead allocation for the batch under activity-based costing. (6 marks) c) Write any three advanatages and two limitations of Activity based Costing