hours has been used. Downward is considering switching to Activity Based Costing in an effort to remain competitive in the market. Two activities and cost drivers related to manufacturing overhead costs have been identified. Budgeted information is asfollows:
|Budgeted Manufacturing Overhead||Budgeted Cost Driver Activity Level|
|General Factory Overhead Costs||$500,000||50,000 machine hours|
|Inspection Overhead Costs||$210,000||5,000 inspection hours|
If one of the?company's products requires5,000 machine hours and 200 inspection?hours, would the product have been overcosted or undercosted under the traditional overhead allocation system and by how much in?total?
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