1. Vector Company manufactures a number of different products. In its traditional costing system, overhead costs are allocated based on a predetermined rate. The company recently switched to an activity-based costing system using different cost drivers for each of their two activities. Information is as follows:

Estimated Predetermined

Activity Overhead Rate

Labor hours 100,000 $12 per labor hour

Number of designs 6,000 $32 per design

Job #16 required 22 labor hours and 3 designs. By how much would this job have been over or undercosted under the traditional costing system?

1. Undercosted by $96
2. Undercosted by $71.09
3. Overcosted by $96
4. Undercosted by $53.76