Trendy Toys & Games, Inc. manufactures specialty toys. Trendy uses a traditional product costing system to assign overhead costs uniformly to all products. To meet industry safety standards and to assure its customers of safe and durable toys, Trendy assigns its quality-control overhead costs to all products at a rate of 21% of direct labor costs. Its direct labor cost for the month of August for its toddler line of toys is $319,000. In response to repeated requests from its financial vice president, Trendy's management agrees to adopt activity-based costing. Data relating to the toddler line of toys for the month of August are as follows: Overhead Rate Activity Cost Pools Materials Inspection pounds Assembly Line Inspection National Toy Association Certification Cost Drivers Number of pounds Number of finished toys Retail orders Number of Cost Drivers Used per Activity 57,000 155,000 toys 600 orders $0.70 per pound $0.16 per toy $2.00 per order (a) Compute the quality-control overhead cost to be assigned to the toddler toy line for the month of August (1) using the traditional product costing system (direct labor is the cost driver), and (2) using activity-based costing. Quality-Control Overhead Cost Traditional costing $ Activity-based costing $ e Textbook and Media Save for Later (b) By what amount does the traditional product costing system undercost or overcost the toddler toy line? The traditional product costing system v overhead by $ (c) Classify each of the activities as value-added or not-value added. Materials Inspection Assembly Line Inspection National Toy Association Value-added Non-value added e Textbook and Media (d) Trendy Toys is exploring options to help reduce overhead costs especially for non-value added activities. One of the proposals is from the National Toy Association. For an additional $1 per order, this entity could perform additional safety checks that would reduce the assembly line inspection costs by $0.01 per toy. Compute the overhead cost assigned to the toddler toy line for the month of August using activity-based costing under this proposal. Overhead cost assigned $ Should Trendy Toys accept the National Toy Association's offer? accept this offer. Trendy Toys should should not e Textbook and Media