Question

ave & Eit ugns Check my work The company has identified the following information about its overhead activity cost pools and the two product lines: Cost Quantity/Anount Consumed by Basic Quantity/Asount Consumed by Luxury 48 moves 110 inspections 5,180 machine hours Activity Cost Pools Materials handling Assigned to Pool $ 3,e8e Cost Driver 10 Number of moves 22 moves Quality control Machine maintenance Number of inspections Number of machine hours points $ 29,670 $154,000 220 inspections 5,900 machine hours eBook 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.) References Basic Model Overhead Assigned Luxury Model Overhead Assigned 2. Calculate the activity rates for each cost pool in Hazelnut's ABC system. (Round your answers to the nearest whole dollar.) Activity Rates Materials Handling per Move Quality Control per Inspection Machine Maintenance per Machine Hour Next> Mc Graw Hill hcations < Prev 3 of 4

Answer 1

Part 1
Activity costs
Materials Handling	$3,080
Quality control	$29,670
Machine maintainance	$1,54,000
Total Overhead costs	$1,86,750
Total machine hours(5900+5100)	11000	hours
Overhead rate($186,750/11,000)	$16.9772727	per hour
Basic model(5,900 hours*OH rate)	$1,00,166
Luxury model(5,100 hours*OH rate)	$86,584
Part 2
Computation of Overhead Rate
Activities	Costs	Cost drivers	Cost driver total	Overhead rate(Costs/Cost driver total)
Materials Handling	$3,080	No. of moves	70	$44.00	per moves
Quality control	$29,670	No. of inspectors	330	$89.9090909	per inspection
Machine maintainance	$1,54,000	No. of machine hours	11,000	$14.00	per machine hours
Part 3 & 4
Allocation of cost based on ABC rate
ABC rate*Quantity of cost driver	Basic model	Luxury model
Materials Handling	$968.00	$2,112.00
Quality control	$19,780.00	$9,890.00
Machine maintainance	$82,600.00	$71,400.00
Tota costs	$1,03,348.00	$83,402.00