Which of the following factors would suggest a switch to activity$-$based costing?

A$)$ Product lines similar in volume and manufacturing complexity.

B$)$ Overhead costs constitute a significant portion of total costs.

C$)$ The manufacturing process has been stable.

D$)$ Production managers use data provided by the existing system.

Activity$-$based costing $($ABC$)$ can eliminate cost distortions because ABC systems

A$)$ establish a cause$-$and$-$effect relationship with the activities performed

B$)$ use single cost pool for all overhead costs, thereby enabling simplicity

C$)$ use a broad average to allocate all overhead costs

D$)$ never consider interactions between different departments in assigning support costs

Ace Co$.$ currently manufactures two products, B$1$ and B$2.$ It currently uses a traditional costing system with direct labor hours as the activity to allocate overhead costs to both products. Ace's total overhead costs are $$50,000.$ The total direct labor hours are $10,000(5,500$ hrs$.$ for B$1$ and $4,500$ for B$2).$

Management is considering switching to the ABC system and has identified the following activities and related drivers:

$\backslash$table$[[$Activities$,$Driver,$\backslash$table$[[$Estimated$],[$Overhead$]],\backslash$table$[[$Total$],[$Expected$],[$Use of$],[$Drivers$]],\backslash$table$[[$Expected Use of$],[$Drivers by Product$]]],[$B$1,$B$2],[\backslash$table$[[$Materials Handling$],[$Machining$]],$orders,$$35,000,2,000,900,1,100],[$Machining$,$machine hrs$.,$$$15,000,800,350,450]]$

Use the data above to compute the amount of overhead to charge to B$1$ under traditional costing.

Use the data above to compute the amount of overhead to charge to B$2$ under ABC costing.