Question

Pre-Built Problems a Julio produces two types of calculator, standard and deluxe. The company is currently using a traditional costing system with machine hours as the cost driver but is considering a move to activity-based costing. In preparing for the possible switch, Julio has identified two cost pools: materials handling and setup. The collected data follow Number of machine hours Number of material moves Number of setups Total estimated overhead costs are $368.360, of which $189.800 is assigned to the material handling cost pool and $178,560 is assigned to the setup cost pool Required: 1. Calculate the overhead assigned to each product using the traditional cost system 2. Calculate the overhead assigned to each product using ABC. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Calculate the overhead assigned to each product using the traditional cost system. (Round the overhead rate to four decimal places and round your final answer to the neat whole dollar amount) Overhead Assigned Standard Model Required 2 >

Answer 1

Answer to Requirement 1:

Overhead Rate = Total Estimated Overhead Costs / Total Number of Machine Hours
Total Number of Machine Hours = 25,600 + 30,600 = 56,200 Machine Hours
Overhead Rate = $368,360 / 56,200
Overhead Rate = $6.5545

Overhead assigned to Standard Model = 25,600 * $6.5545
Overhead assigned to Standard Model = $167,795

Overhead assigned to Deluxe Model = 30,600 * $6.5545
Overhead assigned to Deluxe Model = $200,568

Answer to Requirement 2:

Total Machine Moves = 580 + 880 = 1,460 Machine Moves
Material Handling Cost per Material Moves = $189,800 / 1,460
Material Handling Cost per Material Moves = $130.00

Total Setups = 90 + 530 = 620 Setups
Setup Cost per Setups = $178,560 / 620
Setup Cost per Setups = $288.00

Overhead assigned to Standard Model = ($130.00 * 580) + ($288.00 * 90)
Overhead assigned to Standard Model = $101,320

Overhead assigned to Deluxe Model = ($130.00 * 880) + ($288.00 * 530)
Overhead assigned to Deluxe Model = $267,040