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Dodo Airlines produces two products for it's island travel passengers. Peanuts (A) and Pretzels (B). Dodo airlines uses a traditional absorption or volume-based costing system. The allocation base used is direct labor hours. Dodo Airlines is considering switching an Activity Based Costing (ABC) system by splitting its manufacturing overhead cost of $750,000 across three activities: Setup. Production, and Bagging. Under the traditional volume-based costing system, the predetermined overhead rate is $7.50/direct labo hour. Under the ABC system, the rate for each activity and usage of the activity drivers are as follows: Usage by Activity Usage by Peanuts (A) Pretzles Rate (B) Setup (Batches) $ 100/hour 290 210 Production (Direct Labor Hours) $ 3.00 47,000 53,000 Bagging (Machine Hours) $1,060 48 350 a. Calculate the indirect manufacturing costs assigned to Peanuts under the traditional costing system. Indirect Manufacturing Costs b. Calculate the indirect manufacturing costs assigned to Pretzles under the traditional costing system. Indirect Manufacturing Costs c. Calculate the indirect manufacturing costs assigned to Peanuts under the ABC system. Indirect Manufacturing Costs Indirect Manufacturing Costs e. Which product is under-costed and which is over-costed under the volu Product A Product B

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