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You are the newly appointed CFO for stars which manufactures specialty personal protective outfits for hospitals. You adopted a normal job order costing system and

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You are the newly appointed CFO for stars 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. Activig Costs Driver Amount of Driver Machining $560,000 Machine hours 4,000 Engineering 240,000 Engineering hours 8,000 Assembling units 390,000 Assembly labour hours 12,000 Inspecting products 150,000 Inspection hours 3,000 The following are the jobs Norton worked on in February. Style A Sle B Style C Style D Balance, Feb 1 $45,600 $37,200 $ 0 $ 0 October activity: Direct materials $79,400 $94,100 $43,200 $84,500 Direct labour $65,000 $53,700 $31,800 $62,300 Machine hours 30 50 100 170 Engineering hours 140 90 70 300 Assembly labour hours 200 320 280 250 Inspecting hours 80 60 10 20 On average, 75% of the Work in Process inventories on February1 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 0 is the only job in progress while Jobs Style A and Style B were completed and sold for 150 percent of prime costs. Required: 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. (14 marks)2.Using the traditional costing, determine the costs of Work In Process on October 31. (4 marks)3.Using the traditional costing, determine the gross profits on Job Style A. ( 10 marks) 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. (12 marks)

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