Hazelnut Corp. manufactures lawn ornaments? lt currently has two product lines,
ID: 2430454 • Letter: H
Question
Hazelnut Corp. manufactures lawn ornaments? lt currently has two product lines, the basic and the luxury. Hazelnut has a total of $128,550 in overhead. The company has identified the following information about its overhead activity cost pools and the two product lines: Cost QuantitylAmount ConsumedQuantity/Amount Consumed Assigned to Pool S 3,150 S 30,400 S 95,000 5,000 machine hours Activity Cost Pools Materials handling Quality control Machine maintenance Cost Driver Number of moves Number of inspections Number of machine hours by Basic 11 moveS by Luxury 52 moves 120 inspections 4,500 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 Luxury Model Overhead Assigned 2. Calculate the activity rates for each cost pool in Hazelnut's ABC system. Activity Rates Materials Handling Quality Control Machine Maintenance per Move per Inspection per Machine HourExplanation / Answer
Answers
Working #1
a
Total Overheads
$ 128,550.00
b
Total no. of machine hours
9,500
c=a/b
Predetermined rate for Traditional costing per machine hour
13.53157895
Requirement 1
Basic Model
A
No. of machine hours
5,000
B
Predetermined rate for Traditional costing per machine hour
13.53157895
C=AxB
Overhead assigned
$ 67,658
Luxury Model
A
No. of machine hours
4,500
B
Predetermined rate for Traditional costing per machine hour
13.53157895
C=AxB
Overhead assigned
$ 60,892
Requirement 2
Costs
Total no. of cost drivers
Activity rates
Material Handing
$ 3,150.00
63
$ 50.00
per Move
Quality Control
$ 30,400.00
320
$ 95.00
per inspection
Machine maintenance
$ 95,000.00
9500
$ 10.00
per machine hours
TOTAL
$ 128,550.00
Requirement 3
BASIC MODEL Overhead assigned
Activity rates
No. of activity cost drivers
Overhead Assigned
Material Handing
$ 50.00
per Move
11
$ 550.00
Quality Control
$ 95.00
per inspection
200
$ 19,000.00
Machine maintenance
$ 10.00
per machine hours
5000
$ 50,000.00
Total Overhead ASSIGNED
$ 69,550.00
Requirement 4
LUXURY MODEL Overhead assigned
Activity rates
No. of activity cost drivers
Overhead Assigned
Material Handing
$ 50.00
per Move
52
$ 2,600.00
Quality Control
$ 95.00
per inspection
120
$ 11,400.00
Machine maintenance
$ 10.00
per machine hours
4500
$ 45,000.00
Total Overhead ASSIGNED
$ 59,000.00
* Requirement 5: ABC System is more accurate as it is based on scientific calculation.
Working #1
a
Total Overheads
$ 128,550.00
b
Total no. of machine hours
9,500
c=a/b
Predetermined rate for Traditional costing per machine hour
13.53157895
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