204 Chapter 5 Activity-Based Costing and Management Required: 1. Calculate the monthly quality-control cost to be assigned to the Satin Sheen product line under each of the following product-costing systems. (Round to the nearest dollar.) a. Traditional system, which assigns overhead on the basis of direct-labor cost. b. Activity-based costing. 2. Does the traditional product-costing system overcost or undercost the Satin Sheen product line with respect to quality-control costs? By what amount? (CMA, adapted) Urban Elite Cosmetics has used a traditional cost accounting system to apply quality-control costs uni- formly to all products at a rate of 14.5 percent of direct-labor cost. Monthly direct-labor cost for Satin Sheen makeup is $27,500. In an attempt to more equitably distribute quality-control costs, management is considering activity-based costing. The monthly data shown in the following chart have been gathered for Satin Sheen makeup. Activity Cost Pool Cost Driver Quantity of Driver for Satin Sheen Exercise 5-27 Activity-Based Costing; Quality Control Costs (LO 1, 2, 4) Incoming material inspection Type of material Pool Rates $11.50 per type 12 types In-process inspection.. Product certification Number of units. Per order .14 per unit. 77.00 per order.. 17,500 units 25 orders 204 Chapter 5 Activity-Based Costing and Management Required: 1. Calculate the monthly quality-control cost to be assigned to the Satin Sheen product line under each of the following product-costing systems. (Round to the nearest dollar.) a. Traditional system, which assigns overhead on the basis of direct-labor cost. b. Activity-based costing. 2. Does the traditional product-costing system overcost or undercost the Satin Sheen product line with respect to quality-control costs? By what amount? (CMA, adapted)