The Storybrook Company produces chairs for outdoor patios and indoor dining rooms. The outdoor chairs are made of plastic and the indoor chairs are made of wood. The company has been using traditional job order costing based on the following data, and a plant-wide overhead rate:

	Outdoor	Dining Room
Expected Production	50,000 unit	150,000 unit
Direct material cost	$12.14 per unit	$28.64 unit
Direct labour cost	$10.86 per unit	$10.86 unit

The Storybrook Company is considering implementing an activity based costing system and has recently identified the following information:

	Budgeted Cost	Outdoor	Dining Room
Equipment setup	$44,000	50 setups	30 setups
Machine processing hours (MH)	$875,000	30,000 MH	220,000 MH
Quality control inspection hours (IH)	$630,000	5,000 IH	10,000 IH
Shipping	$80,000	125 shipments	75 shipments

question:

1) If the company had used the traditional job order costing, the cost per set for outdoor chairs would have been higher than the cost determined using activity based costing and the cost per unit for dining room chairs would have been lower using traditional job order costing than using activity based

a. What cost driver did the company use for traditional job costing? Why this one?

b.Explain why the cost of outdoor chairs was higher and the cost of indoor chairs was lower using traditional job order costing as compared to activity based costing.

2) Explain two advantages and two disadvantages of using activity based costing compared to using traditional job order costing.