Question

Hazelnut Corp. manufactures lawn ornaments. It currently has two product lines, the basic and the luxury. Hazelnut has a total of $162,164 in overhead. The company has identified the following information about its overhead activity cost pools and the two product lines: Activity Cost Pools Materials handling Quality control Machine maintenance Cost Driver Number of moves Number of inspections Number of machine hours Cost Assigned to Pool $ 3,404 $ 32,660 $ 126,100 Quantity/Amount Consumed by Basic 12 moves 200 inspections 5,500 machine hours Quantity/Amount Consumed by Luxury 62 moves 100 inspections 4,200 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 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 Quality Control Machine Maintenance per Move per Inspection per Machine Hour

Answer 1

1
Basic model	91949	=162164/(5500+4200)*5500
Luxury model	70215	=162164/(5500+4200)*4200
2
	Activity rates
Materials handling	46	per Move	=3404/(12+62)
Quality Control	109	per Inspection	=32660/(200+100)
Machine Maintenance	13	per machine hour	=126100/(5500+4200)
3
Basic Model
Materials handling	552	=46*12
Quality Control	21800	=109*200
Machine Maintenance	71500	=13*5500
Total overhead assigned	93852
4
Luxury Model
Materials handling	2852	=46*62
Quality Control	10900	=109*100
Machine Maintenance	54600	=13*4200
Total overhead assigned	68352
5
ABC system is more accurate, as it is based on activity usage by each product