Question & Answer: Activity-based costing. The job-costing system at Melody s Custom Framing has five indirect cost pools (purchasing, material handling,…..

Activity-based costing. The job-costing system at Melody s Custom Framing has five indirect cost pools (purchasing, material handling, machine maintenance, product inspection, and packaging). The company is in the process of bidding on two jobs: Job 220, an order of 17 intricate personalized frames, and Job 330, an order of 5 standard personalized frames. The controller wants you to compare overhead allocated under the current simple job costing system and a newly designed activity-based job-costing system. Total budgeted costs in each indirect-cost pool and the budgeted quantity of activity driver are as follows. Information related to Job 220 and Job 330 follows Job 220 incurs more batch-level costs because it uses more types of materials that need to be purchased, moved and inspected relative to Job 330 Compute the total overhead allocated to each job under a simple costing system, where overhead is allocated based on machine-hours. Required Compute the total overhead allocated to each job under an activity-based costing system using the appropriate activity drivers. Explain why Melody’s Custom Framing might favor the ABC job-costing system over the simple job-costing system, especially in its bidding process.