Question

Schell Company manufactures automobile floor mats. It currently has two product lines, the Standard and the Deluxe.

Schell has a total of $26,340 in overhead. It currently uses a traditional cost system with overhead applied to the product on the basis of either labor hours or machine hours. Schell has compiled the following information about possible cost drivers and its two product lines:

Schell Company Total	Quantity/Amount Consumed by Standard Floor Mat Line			Quantity/Amount Consumed by Deluxe Floor Mat Line
1,000 labor hours		620 labor hours		380 labor hours
6,980 machine hours		3,020 machine hours		3,960 machine hours

Required:
1. Suppose Schell uses a traditional costing system with direct labor hours as the cost driver. Determine the amount of overhead assigned to each product line.
2. Suppose Schell uses a traditional costing system with machine hours as the cost driver. Determine the amount of overhead assigned to each product line.

1.Suppose Schell uses a traditional costing system with direct labor hours as the cost driver. Determine the amount of overhead assigned to each product line. (Round activity rates to 4 decimal places and final answers to 2 decimal places.)

	Overhead Assigned Standard Floor Mat Deluxe Floor Mat

2. Suppose Schell uses a traditional costing system with machine hours as the cost driver. Determine the amount of overhead assigned to each product line. (Round activity rates to 4 decimal places and final answers to 2 decimal places.)

	Overhead Assigned Standard Floor Mat Deluxe Floor Mat

Answer 1

a)
Predetrrmined overhed = $26,340 / 1000 Labour Hours	$    26.3400	Per dirct labour hour
	Overhead Assigned
Standard Floor Mat (620 dl x $26.34)	$ 16,330.80
Deluxe Floor Mat (380 dl x $26.34)	$ 10,009.20
2. Suppose Schell uses a traditional costing system with machine hours as the cost driver. Determine the amount of overhead assigned to each product line. (Round activity rates to 4 decimal places and final answers to 2 decimal places.)
Predetrrmined overhed = $26,340 / 6980 Machine Hours	$      3.7736	Per dirct labour hour
	Overhead Assigned
Standard Floor Mat = 3020 MH x $3.7736	$ 11,396.39
Deluxe Floor Mat = 3960 MH x $3.7736	$ 14,943.61