Traditional Allocation versus ABC Allocation of Manufacturing Overhead Costs [LO 1, 2] TriTech Company has been allocating overhead to individual product lines based on each lines relative shares of direct labor hours. For the upcoming year, the company estimated that manufacturing overhead will be $1,800,000 and estimated direct labor hours will be 120,000. The company also has the following estimates

Cost Pool Cost Driver

Total

Amount

Total Amount

of Activity

Maintenance costs Direct labor hours $ 700,000 120,000

Setup costs Number of setups 500,000 200

Engineering costs Number of design changes 600,000 400

$1,800,000