Dawn Corp.. manufactures vacuums for commercial building use. The most popular vacuum product is the MAX Pro. Currently, the company uses a traditional plant-wide rate for allocating manufacturing overhead. The management accountant believes moving to an ABC allocation method would be more accurate. Below are the primary production activities and cost drivers:

Activities	Cost Driver	Allocation Rate	MAX PRO Product Usage
Material Handling	Number of parts	$2 per part	50 parts
Assembly	Labor Hours	$40 per hour	2 labor hours
Inspection	Time at inspection station	$3 per minute	10 minutes

The current traditional cost method allocates overhead based on direct manufacturing labor hours using a rate of $125 per labor hour.

a. What are the indirect manufacturing costs allocated to the MAX Pro product assuming the traditional method is used to allocate overhead costs?

b. What are the indirect manufacturing costs allocated to the MAX Pro product assuming an activity- based-costing method is used to allocate overhead costs?

c. Based on your analysis above, is Dawn likely under or over-pricing the MAX Pro product?

d. Explain “Why” for your answer in part c. above.