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Total overhead costs and activity levels for the year are estimated as follows: Overhead costs Activity levels Activity Direct labor hours Machine hours 2,900

Total overhead costs and activity levels for the year are estimated as follows: Overhead costs Activity levels Activity Direct labor hours Machine hours 2,900 hours 2,400 hours Setups $465,500 95 setup hours Inspections $405,000 2,700 inspection hours $870.500 Required: Using the traditional system, determine the operating profit per unit for the brass style of faucet. Determine the activity-cost-driver rate for setup costs and inspection costs. Using the ABC system, for the brass style of faucet compute the estimated overhead costs per unit. 2. compute the estimated operating profit per unit. a. b. c. d. Explain the difference between the profits obtained from the traditional system and the ABC system. Which system provides a better estimate of profitability? Why?

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