1. Determine the manufacturing overhead cost per unit of each of the company’s two products under the traditional costing system.

2. Determine the manufacturing overhead cost per unit of each of the company’s two products under activity-based costing system.

3. Compare the results in part a and b under both costing systems and specify the differences in both systems.

4. What is the significance of the Activity Costing System that Mike is referring to?

5. How is ABC system different from traditional costing system?

6. The use of which activity level, budgeted (same as expected) or maximum capacity, is consistent with ABC? Explain.

7. How might the use of ABC based on maximum capacity activity level enhance a firm’s ability to compete on price? Explain.

8. If you were to recommend one of the costing systems for Wolseley Inc., which one 

9. would you pick and why?

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