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The Outback Camping Company manufactures two types of tents for the Defence Force. The Desert Storm (DS), a high-volume product with sales totalling 6,400 per

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The Outback Camping Company manufactures two types of tents for the Defence Force. The "Desert Storm (DS), a high-volume product with sales totalling 6,400 per annum The "Alpine Country (HC), a low-volume product with sales of 2,100 per annum. Each product requires 26 hours of direct labour (DLH) Total annual DHL is 131,250 (6,650+2,100) DL cost is $28.00 per hour Estimated annual manufacturing overhead (MO) is $340,000 Direct material (DM) costs are as follows Desert Storm (DS): Alpine Country (HC): $665.00 per unit $420.00 per unit The following costs have been identified for purposes of applying ABC (Activity-Based Costing) Setting up machines Construction of machines Inspections $ 60,000 $200,000 20,000 No. of set-ups Machines hours No. of inspections 50 40,000 140 Cost drivers Desert Storm Alpine Country 15 14,000 50 35 Setting up machines Construction of machines Inspections No. set ups Machine hours No of inspections 26,000 90 Required Calculate the actual costs for both products using the traditional and ABC methods, identifying the amount for each product that is overstated or understated (8 marks).You should show your calculations. What are the benefits of an ABC method? (2 marks)

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