Crane Toys & Games, Inc. manufactures specialty toys. Crane uses a traditional product costing system to...

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Crane Toys & Games, Inc. manufactures specialty toys. Crane uses a traditional product costing system to assign overhead costs uniformly to all products. To meet industry safety standards and to assure its customers of safe and durable toys, Crane assigns its quality-control overhead costs to all products at a rate of 22% of direct labor costs. Its direct labor cost for the month of August for its toddler line of toys is $302,000. In response to repeated requests from its financial vice president, Crane's management agrees to adopt activity-based costing. Data relating to the toddler line of toys for the month of August are as follows: Activity Cost Pools Materials Inspection Cost Drivers Number of pounds Overhead Rate Number of Cost Drivers Used per Activity $0.70 per pound 40,000 pounds Assembly Line Inspection Number of finished toys National Toy Association Certification Retail orders $0.16 per toy $2.00 per order 204,000 toys 1,100 orders (a) Compute the quality-control overhead cost to be assigned to the toddler toy line for the month of August (1) using the traditional product costing system (direct labor is the cost driver), and (2) using activity-based costing. Traditional costing Activity-based costing Quality-Control Overhead Cost +A $ +A Crane Toys & Games, Inc. manufactures specialty toys. Crane uses a traditional product costing system to assign overhead costs uniformly to all products. To meet industry safety standards and to assure its customers of safe and durable toys, Crane assigns its quality-control overhead costs to all products at a rate of 22% of direct labor costs. Its direct labor cost for the month of August for its toddler line of toys is $302,000. In response to repeated requests from its financial vice president, Crane's management agrees to adopt activity-based costing. Data relating to the toddler line of toys for the month of August are as follows: Activity Cost Pools Materials Inspection Cost Drivers Number of pounds Overhead Rate Number of Cost Drivers Used per Activity $0.70 per pound 40,000 pounds Assembly Line Inspection Number of finished toys National Toy Association Certification Retail orders $0.16 per toy $2.00 per order 204,000 toys 1,100 orders (a) Compute the quality-control overhead cost to be assigned to the toddler toy line for the month of August (1) using the traditional product costing system (direct labor is the cost driver), and (2) using activity-based costing. Traditional costing Activity-based costing Quality-Control Overhead Cost +A $ +A