O ezto.mheducation.com/hm.tpx Carise Corp, vwhich manutactures ceiling tans, cur
ID: 2406260 • Letter: O
Question
O ezto.mheducation.com/hm.tpx Carise Corp, vwhich manutactures ceiling tans, currently has two product ines, the Indoor and the Outsoor Carise has totae overtead or $139 0ss Cartse has identified the following Information about its overhead activity cost pools and the two product lines Cost Activity Cost P by Outdoor 4 900 I Quality control Number of Number of machine hours s 86,670 32.370 18,000 machine hours 21 5 800 inspections 000 machine hours Required: 1. Suppose Carlise used a traditional costing system with machine hours as the cost driver Determine the amount of overthead assigned to each proouct ine (Do not rouns intermediate calcuiaions and rounc Indoor Model Outdoor Model Total 2. Calculate the activity proportions for each cost pool in Carlise's ABC system (Round your answers to 2 decimal places) Line Outdoor Line %perMove uality Contral lachine maintenance % lper Machine Hour will assign to the Indor line if it uses an ABC system (Round your intermediate calculations to 2 decimal places and round your tinal answen alculate the amount of overhead that CarliseExplanation / Answer
1) Total Machine hours = 18,000+21,000 = 39,000 machine hours
Total Overhead = $139,038
Overhead assigned to Indoor Model = $139,038*18,000/39,000 = $64,171
Overhead assigned to Outdoor Model = $139,038*21,000/39,000 = $74,867
2) Calculation of Activity proportions for each cost
3) Calculation of Overhead assigned to Indoor Model (Amounts in $)
4) Calculation of Overhead assigned to Outdoor Model (Amounts in $)
5) ABC system is more accurate as it considers the usage of each activity by each product for assigning overhead.
Activity Proportions Indoor Line Outdoor Line Materials Handling [590/(590+400)] = 59.60% (400/990) = 40.40% per Move Quality Control [5,800/(5,800+4,900)] = 54.21% (4,900/10,700) = 45.79% per Inspection Machine Maintenance (18,000/39,000) = 46.15% (21,000/39,000) = 53.85% per Machine HourRelated Questions
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