The manufacturing division of an electronics company uses activity-based costi

The manufacturing division of an electronics company uses activity-based costing. The
company has identified three activities and the related cost drivers for indirect production
costs.
Activity Cost Driver
Activity 1 Direct materials cost
Activity 2 Direct labor cost
Activity 3 Kilowatt hours
Three types of products are produced. Direct costs and cost-driver activity for each
product for a month are as follows:
Product A Product B Product C
Direct materials cost $75000 $50000 $125000
Direct labor cost $6000 $1000 $3000
Direct labor hours 1000 500 1500
Kilowatt hours 150000 200000 150000
Indirect production costs for the month are as follows:
Activity 1 $12000
Activity 2 20000
Activity 3 16000
Total $48000
A) Compute the indirect production costs allocated to each product using the ABC system.
B) Compute the indirect production costs allocated to each product using a traditional
costing system. Assume indirect production costs are allocated to each product using the
cost driver: direct labor hours.