PA4-1 Assigning Costs Using Traditional System, ABC System [LO 4-1, 4-3, 4-4, 4-6]
Hazelnut Corp. manufactures lawn ornaments. It currently has two product lines, the basic and the luxury. Hazelnut has a total of $160,188 in overhead.
The company has identified the following information about its overhead activity cost pools and the two product lines:
Activity Cost Pools Cost Driver Cost Assigned
to Pool Quantity/Amount Consumed by
Basic Quantity/Amount Consumed by
Luxury Materials handling Number of moves $ 4,108 18 moves 61 moves Quality control Number of inspections $ 31,280 240 inspections 100 inspections Machine maintenance Number of machine hours $ 124,800 5,400 machine hours 4,200 machine hours
Required:
1. Suppose Hazelnut used a traditional costing system with machine hours as the cost driver. Determine the amount of overhead assigned to each product line. (Do not round intermediate calculations and round your final answers to the nearest whole dollar amount.)
Basic Model Overhead Assigned Luxury Model Overhead Assigned
2. Calculate the activity rates for each cost pool in Hazelnutâs ABC system.
3. Calculate the amount of overhead that Hazelnut will assign to the basic line if it uses an ABC system.
4. Determine the amount of overhead Hazelnut will assign to the luxury line if it uses an ABC system.
PA4-1 Assigning Costs Using Traditional System, ABC System [LO 4-1, 4-3, 4-4, 4-6]
Hazelnut Corp. manufactures lawn ornaments. It currently has two product lines, the basic and the luxury. Hazelnut has a total of $160,188 in overhead.
The company has identified the following information about its overhead activity cost pools and the two product lines:
| Activity Cost Pools | Cost Driver | Cost Assigned to Pool | Quantity/Amount Consumed by Basic | Quantity/Amount Consumed by Luxury | |||
| Materials handling | Number of moves | $ | 4,108 | 18 moves | 61 moves | ||
| Quality control | Number of inspections | $ | 31,280 | 240 inspections | 100 inspections | ||
| Machine maintenance | Number of machine hours | $ | 124,800 | 5,400 machine hours | 4,200 machine hours | ||
Required:
1. Suppose Hazelnut used a traditional costing system with machine hours as the cost driver. Determine the amount of overhead assigned to each product line. (Do not round intermediate calculations and round your final answers to the nearest whole dollar amount.)
| Basic Model | Overhead Assigned | |
| Luxury Model | Overhead Assigned |
2. Calculate the activity rates for each cost pool in Hazelnutâs ABC system.
3. Calculate the amount of overhead that Hazelnut will assign to the basic line if it uses an ABC system.
4. Determine the amount of overhead Hazelnut will assign to the luxury line if it uses an ABC system.
Related questions
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Carlise Corp., which manufactures ceiling fans, currently hastwo product lines, the Indoor and the Outdoor. Carlise has totaloverhead of $136,612. |
Carlise has identified thefollowing information about its overhead activity cost pools andthe two product lines: |
| Activity Cost Pools | Cost Driver | Cost Assigned to Pool | Quantity/Amount Consumed by Indoor Line | Quantity/Amount Consumed by Outdoor Line | |||
| Materialshandling | Number of moves | $ | 18,661 | 560 moves | 430 moves | ||
| Quality control | Number of inspections | $ | 76,590 | 6,000inspections | 5,100inspections | ||
| Machinemaintenance | Number of machine hours | $ | 41,360 | 22,000 machinehours | 25,000 machinehours | ||
| Required: | |||||||||||||||||||||||||||||||||||||||||||
| 1. | Suppose Carlise used a traditional costing system with machinehours as the cost driver. Determine the amount of overhead assignedto each product line. (Do not round intermediatecalculations and round your final answers to the nearest wholedollar amount.)
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