Question

PA4-1 Assigning Costs Using Traditional System, ABC System [LO 4-1,4-3,4-4, 4-6] Hazelnut Corp. manufactures lawn ornaments. It currently has two product lines, the basic and the luxury. Hazelnut has a total of $183,099 in overhead. The company has identified the following information about its overhead activity cost pools and the two product lines: Quantity/Amount Consumed by 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 $ 2,604 S 33,495 $ 147,000 Quantity/Amount Consumed by Basic 18 moves 240 inspections 5,900 machine hours Luxury 44 moves 145 inspections 3,900 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. Activity Rates per Move Materials Handling Quality Control Machine Maintenance per Inspection per Machine Hour

Answer 1

Cost driver	Quantity/Amount consumed by Basic	Quantity/Amount consumed by Luxury	Total Quantity/Amount consumed
Number of moves	18	44	62
Number of inspections	240	145	385
Number of machine hours	5900	3900	9800

1.
Basic model [ 183099 * 5900 / 9800 ]	110233	Overhead Assigned
Luxury model [ 183099 * 3900 / 9800 ]	72866	Overhead Assigned

2.
	Activity rates [ Overhead assinged to cost pool / Total quantity/amount consumed ]
Materials Handling [ 2604 / 62 ]	42	per Move
Quality control [ 33495 / 385 ]	87	per Inspection
Machine Maintenance [ 147000 / 9800 ]	15	per Machine hour

3.
Basic Model
Materials handling [ 42 * 18 ]	756
Quality control [ 87 * 240 ]	20880
Machine maintenance [ 15 * 5900 ]	88500
Total overhead assigned	110136

4.
Basic Model
Materials handling [ 42 * 44 ]	1848
Quality control [ 87 * 145 ]	12615
Machine maintenance [ 15 * 3900 ]	58500
Total overhead assigned	72963