wwwny is considering the adoption of an activity based costing (ABC) system because the manage i t that their traditional costing system distorts the product costs. This company produces and sells two PN Model S and Model D. Their traditional costing system uses direct labor hours (DLHS) as the allocation base for manufacturing overhead (MOH) cost. The production managers decided that major activities are Machining Machine setups, Product design, and Order size and determined the costs for each activity. They also identified how many MHs, setups, product design, and DLHs each product requires. Additional information follows: Model S Model D Price $120 per unit $140 per unit Costs: Direct Materials (DM) $32 per unit $36 per unit Direct labor (DL) $23 per unit $30 per unit Units produced 200,000 units 100,000 units Activities (Activity measure): Machining (MHs) 100,000 MHS 75,000 MHs Machine setups (Number of setups) 100 setups 300 setups Product design (Number of products) Order size (DLHS) 200,000 DLHS 100,000 DLHs Manufacturing Overhead Costs Machining $700,000 Machine setups $800,000 Product design $240,000 Order size $720,000 Total Cost $2,460,000 Which of the following statements is true? A. The traditional costing system overcosts Model S by $2.20. B. The traditional costing system undercosts Model S by $6.00. C. The traditional costing system overcosts Model D by $4.40. D. The traditional costing system undercosts Model D by $12.60. E. Both systems come up with the same costs for both products