Tulum Company is considering the adoption of an activity$-$based costing $($ABC$)$ system because the managers suspect that their traditional costing system distorts the product costs. This company produces and sells two products M$408$ and N$527.$ Their traditional costing system uses direct labor cost as the allocation base for manufacturing overhead cost. The production managers decided that the major activities are Machine setups, Special Processing, General factory, and Customer Relations and determined the costs for each activity. All Customer Relations costs are classified as selling and admin expenses.They also identified how many setups, MHs$,$ and DLHs each product requires. Product M$408$ N$527$ Price $ $150$ $ $270$ Direct Material $ $44$ $ $72$ DLHs$/$unit $1\mathrm{.}02\mathrm{.}0$ Units $2,0001,000.$ Activity Cost Pool Cost Driver or Activity Measure Estimated OH cost Machine setup # of setups $ $46,200$ Special processing MHS $ $55,000$ General factory DLHs $ $37,500$ Customer Relations on $5$ customers$)$ # of customers $ $20,000.$ Activity Measure

M$408$

N$527$

# of setups

$60$

$120$

Machine hours

$8,000$

$12,000.$ Relative to the traditional costing system, the product cost for N$527$:

Answer: is $\_\_\_\_\_($lower or higher$)$

under the ABC system by $\_\_\_\_(41\mathrm{.}27$ or $13\mathrm{.}2)$

Q: One particular client, YET, requested to buy $500$ units of N$501.$ How much is the ABC customer margin of customer YeTI $?\_\_\_\_\_\_\_\_\_(17725,33725,37725,89725)$