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unker makes two types of briefcase, fabric and leather. The company is currently using a traditional costing system with labor hours as the cost driver

unker makes two types of briefcase, fabric and leather. The company is currently using a traditional costing system with labor hours as the cost driver but is considering switching to an activity-based costing system. In preparation for the possible switch, Bunker has identified two activity cost pools: materials handling and setup. Pertinent data follow:

Fabric Case Leather Case
Number of labor hours 20,000 10,000
Number of material moves 819 1,131
Number of setups 84 156

Total estimated overhead costs are $315,900, of which $253,500 is assigned to the materials handling cost pool and $62,400 is assigned to the setup cost pool. Required: 1. Calculate the overhead assigned to the leather case line using the traditional costing system based on direct labor hours. (Do not round intermediate calculations.) 2. Calculate the overhead assigned to the leather case line using ABC. 3. Was the leather case over- or undercosted by the traditional cost system compared to ABC?

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