Vex Corporation manufactures a variety of products. In the past, Vex had been using a traditional overhead allocationsystem based on macjine hours. For the current year, Vex decided to swithch to activity-based costing using machine hours and the number of inspections as measures of activity. Information on these measures of activity are related overhead rates for the current year are as follows; ESTIMATED ACTIVITY PREDETERMINED OVERHEAD RATE.

Machine Hours 50,000 $8 Per Machine Hour

Number of inspections 3,000 $40 per inspection

Job no. 812 for the current year required 15 machine hours and 2 inspections. Would this job have been overcosted or undercosted under the traditional sytem.

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