PA4-1 Assigning Costs Using Traditional System, ABC System [LO 4-1, 4-3, 4-4, 4-
ID: 2337760 • Letter: P
Question
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 $164,716 in overhead. The company has identified the following information about its overhead activity cost pools and the two product lines: Cost Assigned to Pool $ 2,976 $35,640 $126,100 Quantity/AmountQuantity/Amount Consumed Activity Cost Pools Materials handling Quality control Machine maintenance Cost Driver Number of moves Number of inspections Number of machine hours Basic 30 moves 210 inspections 4,100 machine hours by Luxury 32 moves 150 inspections 5,600 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 Overhead Assigned Luxury ModelExplanation / Answer
1) Overhead assigned :
2) Calculate activity rate :
3) Overhead assigned :
4) Overhead assigned :
5) ABC system is more accurate
Basic model (164716/9700*4100) 69622 Luxury model (164716/9700*5600) 95094Related Questions
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