Compute the total amount of overhead costs assigned to each model using: 1. Traditional costing system 2. Activity-based costing system 3. Discuss the effects of the difference in the computed amounts of overhead costs.
Kai Corp. manufactures two models of beds, the standard and the deluxe model. The following activity and cost information has been compiled:
Standard Deluxe OH Costs
No. of setups 9 21 P 90,000
No. of components 90 150 210,000
No. of DLH 650 150
Required: Compute the total amount of
1. Traditional costing system
2. Activity-based costing system
3. Discuss the effects of the difference in the computed amounts of overhead costs. (atleast 50 words)
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