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Waymire Ltd. manufactures two products and currently allocates overhead based on direct labour hours. For the coming year, the company is considering changing to an

Waymire Ltd. manufactures two products and currently allocates overhead based on direct labour hours. For the coming year, the company is considering changing to an activity based costing system by allocating overhead based on 3 activities. The estimated amount of overhead traceable to the 3 activities for the coming year are given below:

Activity

Cost driver

Cost

Product 1

Product 2

Purchase orders

# of orders

$840347

312

579

Maintenance

Machine hours

$456759

18555

19721

Inspection

# of inspections

$718649

1526

2200

Total estimated direct labour hours for the coming year are 33444 hours for Product 1 and 84234 hours for Product 2.

What is the difference between total overhead allocated to Product 2 using activity based costing versus traditional costing? Note: a negative number indicates less total overhead allocated using activity based costing.

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