1. What are the driving factors that explain the difference in product cost between ABC and the traditional cost system?

2. Base on your findings from the ABC costing system, what management decisions would you recommend to enhance profitability and efficiency, that is, exploit ABC for ABM (Activity Based Management)?

3. Explain under what circumstances an ABC costing system will not have much added value compared with a traditional costing system? In your answer also consider the costs/benefits of an ABC costing system.

ABC, Process Costing (35 points). Jasper Company produces two type of bikes - regular and electric - and operate at capacity. The following data pertain to the two products. Annual production (units) Direct material costs Direct manufacturing labor costs Direct manufacturing labor-hours Machine-hours Number of production runs Inspection hours Regular Bike 6,000 2,400,000 1,320,000 33,000 18,000 60 1,500 Electric Bike 2,000 1,000,000 520,000 13,000 18,000 100 500 Total manufacturing overhead costs are as follows: Machining costs 4,500,000 Setup costs 1,560,000 Inspections costs 1,300,000 Answer the following questions assuming the company is using Activity Based Costing