Exercise $5-7$B Comparing an ABC system with a traditional cost system

Use the information in Exercise $5-6$B to complete the following requirements. Assume that before shift$-$

ing to activity$-$based costing, Rankin Industries allocated all overhead costs based on direct labor hours.

Direct labor data pertaining to the two surge protectors follow.

Required

a$.$ Compute the amount of overhead cost allocated to each type of surge protector when using direct

labor hours as the allocation base.

b$.$ Determine the cost per unit for overhead when using direct labor hours as the allocation base and

when using ABC.

c$.$ Explain why the per$-$unit overhead cost is lower for the higher$-$volume product when using ABC.