Hazelnut Corp. manufactures lawn ornaments. It currently has two product lines,
ID: 2331670 • Letter: H
Question
Hazelnut Corp. manufactures lawn ornaments. It currently has two product lines, the basic and the luxury. Hazelnut has a total of $154,972 in overhead The company has identified the following information about its overhead activity cost pools and the two product lines Cost Assigned to Pool $ 3,752 $ 27,720 $123,500 Quantity/Amount Quantity/Amount Consumed Cost Driver Number of moves Number of inspections Number of machine hours Consumed by Basic 29 moves 170 inspections 5,700 machine hours by Luxury 38 moves 145 inspections 3,800 machine hours Activity Cost Pools Materials handling Quality control Machine maintenanceExplanation / Answer
Requirement 1
Calculation of overhead per machine hour
(A)
Total Overheads
$ 154,972.00
(B)
Total Machine Hours (5700+3800)
9500
(A/B)
Overhead per Machine hours
$ 16.31
Schedule of cost assigned
Basic Model
Luxury model
Machine Hours (A)
5700
3800
Overhead per Machine hours (B)
$ 16.31
$ 16.31
Overheads Assigned (AxB)
$ 92,983.20
$ 61,988.80
Answer
Basic Model
$ 92,983.20
Overhead Assigned
Luxury model
$ 61,988.80
Overhead Assigned
Requirement 2
Cost Drivers Rate
Activity
Cost Drivers
Total Activity Amount (A)
Level of Activity (B)
Activity Rate (C=A/B)
Material Handling
Number of Moves
$ 3,752.00
67
$ 56.00
Per Move
Quality Control
Number of Inspections
$ 27,720.00
315
$ 88.00
Per inspection
Machine Maintenance
Number of Machine Hours
$ 123,500.00
9500
$ 13.00
Per Machine Hour
$ 154,972.00
Answer
Cost Drivers Rate
Activity
Activity Rates
Material Handling
$ 56.00
Per Move
Quality Control
$ 88.00
Per inspection
Machine Maintenance
$ 13.00
Per Machine Hour
Requirement 3
Basic Model Overheads assigned
Activity rate(A)
Activity Driver Incurred (B)
Overhead Assigned (C=A*B)
Utilities
$ 56.00
29
$ 1,624.00
Scheduling and Setups
$ 88.00
170
$ 14,960.00
Material Handling
$ 13.00
5700
$ 74,100.00
Total Overheads Assigned
$ 90,684.00
Requirement 4
Luxury Model Overheads assigned
Round
Activity rate(A)
Activity Driver Incurred (B)
Overhead Assigned (C=A*B)
Utilities
$ 56.00
38
$ 2,128.00
Scheduling and Setups
$ 88.00
145
$ 12,760.00
Material Handling
$ 13.00
3800
$ 49,400.00
Total Overheads
$ 64,288.00
(A)
Total Overheads
$ 154,972.00
(B)
Total Machine Hours (5700+3800)
9500
(A/B)
Overhead per Machine hours
$ 16.31
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