Fle Edit View History Bookmarks People Window Help O ezto mheducation.comm.tp Bu
ID: 2430954 • Letter: F
Question
Fle Edit View History Bookmarks People Window Help O ezto mheducation.comm.tp Bunker makes two types of bielcase, tabric and jeather. The company is cumenty using a traditional cosding system with labor hours as the cost diiver but is considering sutching to an activite-based costing syster·lnpreparaan for the posstie swaa Bunker ras de eted two acoetyade posmatinals harang ad inp Ponnen aa ade 8 000 Total estimated overhead costs are $254,000, of which $210,000 is assigned to the materials handing cot pool and $44,000s sied to the serup cost pool 1. Calculate the overthend assigned to the fabrlc case using the traditional costing system based on direct labor hours (Do not round intermediate calculations and round your final answer to th? nearest whole dollar amount> 2.Calalate the ovetead assigned to the thric ane usng ABC(Roundactity rat" er activity p oportion·and intermediate calculations to four decimal plices) 3. Wars the fabric case over or undercosted by the traditional cost system compared ADC deleExplanation / Answer
1. Overhead assigned: $147484
Overhead assigned to Fabric case = $254000 x 18000/(18000 + 13000) = $254000 x 18000/31000 = $147484
2. Overhead assigned: $92800
3. Fabric case: Overcosted
The fabric case was over costed by the traditional cost system by $147484 - $92800 = $54684
1. Overhead assigned: $43020
Overhead assigned to Leather case = $143400 x 6000/(14000 + 6000) = $143400 x 6000/20000 = $43020
2. Overhead assigned: $85980
3. Leather case: Undercosted
The leather case was under costed by the traditional cost system by $85980 - $43020 = $42960
Activity Cost Pool Cost $ Driver Activity Rate $ Fabric case Driver Cost $ Materials handling 210000 1750 120 700 84000 Setup 44000 200 220 40 8800 Total cost $ 254000 92800Related Questions
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