Question

Schell Company manufactures automobile floor mats. It currently has two product lines, the Standard and the Deluxe. Suppose that Schell has conducted further research into its overhead and potential cost drivers. As a result, the company has compiled the following detailed information, breaking total overhead into three cost pools: Activity Cost Pools Material handling Quality control Machine maintenance Cost Assigned to Cost Driver Pool Number of moves $ 3,400.00 Number of inspections $ 9,590.00 Number of machine hours $16,537.00 Quantity/Amount Quantity/Amount consumed by Consumed by Standard Floor Mat Line Deluxe Floor Mat Line 48 moves 52 moves 580 inspections 790 inspections 3,080 machine hours 4,110 machine hours Required: 1. Calculate the activity rates for each cost pool assuming Schell uses an ABC system. 2. Calculate the amount of overhead that Schell will assign to the Standard floor mat line. 3. Determine the amount of overhead Schell will assign to the Deluxe product line. Complete this question by entering your answers in the tabs below. Req 1 Req 2 and 3 Calculate the activity rates for each cost pool assuming Schell uses an ABC system. (Round your answers to 2 decimal places.) Activity Rate per Material Move Material Handling Quality Control per Inspection Machine maintenance per Machine Hour

Answer 1

Requirement 1

	Activity rate
Material handling	$             34.00	Per move
Quality control	$               7.00	Per inspection
Machine maintenance	$               2.30	Per machine hour

Requirement 2 and 3

	Total Activity cost
Standard floor mat line	$ 12,776.00
Deluxe product line	$ 16,751.00

Working

Calculation of Activity rates
Activity Cost Pool	Activity driver	Overhead Cost (A)	Expected Activity (B)	Activity rate (A/B)
Material handling	Number of move	$ 3,400	100	$             34.00	Per move
Quality control	Number of inspection	$ 9,590	1370	$               7.00	Per inspection
Machine maintenance	Number of machine hour	$ 16,537	7190	$               2.30	Per machine hour

.

Cost assigned to Standard floor mat line
Activity name	Activity Rates	Activity	ABC Cost
	(A)	(B)	(A x B)
Material handling	$           34.00	48.00	$ 1,632
Quality control	$             7.00	580.00	$ 4,060
Machine maintenance	$             2.30	3,080.00	$ 7,084
Total Overheads assigned			$ 12,776

.

Cost assigned to Deluxe product line
Activity name	Activity Rates	Activity	ABC Cost
	(A)	(B)	(A x B)
Material handling	$           34.00	52	$ 1,768
Quality control	$             7.00	790	$ 5,530
Machine maintenance	$             2.30	4110	$ 9,453
Total Overheads assigned			$ 16,751