Question

QUESTION 21 Jerome and Sons has been using the traditional product costing approach to assign overhead to all of its essentials The company MUST follow FDA regulations and is alto concerned with providing customers salty, sanitary, and alergies free oils. Recently, Jerome increased its quality control actives Quality control overhead costs are assigned to products at a rate of 19.5% of direct labor costs In September, the company's direct labor cost for its crisis 5103,000 Management of Jerome has been requested by its CFO to adopt Activity Based Couting (ADC). Data related to its spices for the month of September follows below Activity Cost Pools Cost Drivers Overhead Rate Drivers Used Inspections of materials received Number of pounds $0.99 per pound 6.5 pounds In process inspections Number of servings 50 33 per serving 10,000 servings FDA Certification Customer orders 51300 per order 500 orders INSTRUCTIONS Write a meme to the CFO that wil indicate whether ADC is a better method of overhead alocation than the traditional for it essentials. You should indicate the overhead cost to be signed to the Spices product line for the month of October, based on the (1) traditional method and (2) ABC. Next, you should compare and contract the results of the two methods. Be very specific in presenting your comparison De sure amounts are included Show relevant computations 31200 TTTT Paragraph Anal %DOQ T TO Words o