Chapter 7, Problem 16P

To determine

Traditional costing and Activity based costing{ABC}:

Activity based costing is for the effective allocation of the overhead cost. There are two types of cost direct cost and indirect cost. Direct cost is the material and labor for the production which plays a major role in production. Indirect cost is the overhead with respect to the activities such as setting up, maintenance etc., To increase the quantity of production and quality of production activity based costing contributes a lot.

To calculate:

Product margin using traditional and activity based costing. Compare both the assignments.