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 followi 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 $ 2,522.00 Number of inspections $ 9,729.00 Number of machine hours $14,200.00 Quantity/Amount consumed by Standard Floor Mat Line 41 moves 610 inspections 3,000 machine hours Quantity/Amount Consumed by Deluxe Floor Mat Line 56 moves 800 inspections 4,100 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. Req1 Req 2 and 3 2. Calculate the amount of overhead that Schell will assign to the Standard floor mat line. (Round your intermediate calculations to 2 decimal places.) 3. Determine the amount of overhead Schell will assign to the Deluxe product line. (Round your intermediate calculations to 2 decimal places.) Show less Total Overhead Assigned 2. 3. Standard floor mat line Deluxe product line

Answer 1

Ans. 1	*Calculation of Activity rate :
	Activity cost pools	Cost assigned to Pool (a)	Total activity (b)	Activity rate (a/b)
	Material handling	$2,522	97	$26.00
	Quality control	$9,729	1410	$6.90
	Machine maintenance	$14,200	7100	$2.00
	*WORKING NOTES:
	*Calculation of Total activity :
	Activity cost pools	Cost driver	Standard (a)	Deluxe (b)	Total activity (a+b)
	Material handling	Number of moves	41	56	97
	Quality control	Number of inspections	610	800	1410
	Machine maintenance	Number of machine hours	3000	4100	7100
Ans. 2 & 3	Overhead cost assigned = Activity rate * Cost drivers by product
		Total overhead assigned
	Standard floor mat line	$11,275
	Deluxe product line	$15,176
	*Calculations for overhead cost assigned:
			Cost drivers by product		Overhead cost assigned
	Activity cost pool	Activity rate	Standard (a)	Deluxe (b)	Budget (a)	Deluxe (b)
	Material handling	$26.00	41	56	$1,066	$1,456
	Quality control	$6.90	610	800	$4,209	$5,520
	Machine maintenance	$2.00	3000	4100	$6,000	$8,200
	Total Overhead Cost Assigned				$11,275	$15,176