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Texlow Corporation manufactures two models of power hammers, a standard and a deluxe model. The following activity and overhead cost information has been compiled: Number of Number of Number of Product Setups Components Direct Labor Hours Standard 16 800 Deluxe 34 16 500 Set-up activity Inspection Activity Overhead costs $30,000 $35,000 9 1. Assume a traditional costing system applies the total overhead costs (sum of set-up activity and inspection activity costs) based on direct labor hours. What is the total amount of overhead cost assigned to the Standard and Deluxe model, respectively? 2. Number of setups and number of components are identified as activity-cost drivers for the set-up activity and inspection activity, respectiqely. Assuming an activity-based costing system is used, what is the total amount of overhead cost assigned to the Standard and Deluxe model, respectively? 3. Texlow hopes to reduce the overhead costs associated with the setups in the long-run keeping the production at current levels: i) By reducing the cost of performing each set up by 10% and ii) By reducing the setups for standard from 16 to 10 and for deluxe from 34 to 30. What are the expected savings in overhead costs related to setups assuming an activity-based costing system is used

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