You are the newly appointed CFO for Star Company which manufactures specialty personal protective outfits for hospitals. You adopted a normal job order costing system and also activity based costing to better understand the costs of producing the different types of outfits. Norton identified four activities machining, engineering, assembling, and inspecting under activity based costing system. Under the old traditional volume-based costing system, overhead is assigned to different jobs using machine hours.

On average, 75% of the Work in Process inventories on February 1 are prime costs. The actual activity costs for machining, engineering, assembling and inspecting for February were $47,400, $20,000, $32,800, and $12,500, respectively. By February 28, Job Style C is the only job in progress while Jobs Style A and Style B were completed and sold for 150 percent of prime costs.

1.Determine the cost of Style D completed under the old traditional volume-based costing system and the newly implemented activity-based costing system. Briefly comment on any difference in the cost of Style D. 2.Using the traditional costing, determine the costs of Work In Process on October 31. 3.Using the traditional costing, determine the gross profits on Job Style A. 4.Using activity-based costing, determine any under- or over-allocated overhead for the month ended February 28. Briefly comment on the causes of the under- or over-allocated overhead and how they should be accounted for.

Activity Machining Engineering Assembling units Inspecting products Costs $560,000 240,000 390,000 150,000 Driver Machine hours Engineering hours Assembly labour hours Inspection hours Amount of Driver 4,000 8,000 12,000 3,000 The following are the jobs Norton worked on in February. Style A $45,600 Style B $37,200 Style C $ 0 Style D $ 0 Balance, Feb 1 October activity: Direct materials Direct labour Machine hours Engineering hours Assembly labour hours Inspecting hours $79,400 $65,000 30 140 200 80 $94,100 $53,700 50 90 320 $43,200 $31,800 100 70 280 10 $84,500 $62,300 170 300 250 60 20