Question

Hazelnut Corp. manufactures lawn ornaments. It currently has two product lines, the basic and the luxury. Hazelnut has a total of $173,876 in overhead. The company has identified the following information about its overhead activity cost pools and the two product lines: Quantity/Amount Consumed Quantity/Amount Consumed by 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 $ 3,996 $ 29,880 $ 140,000 Basic 21 moves 180 inspections 5,300 machine hours Luxury 53 moves 180 inspections 4,700 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 Materials Handling Quality Control Machine Maintenance per Move per Inspection per Machine Hour

Answer 1

1) Overhead assigned under traditional costing

Basic Model (173876/10000*5300)	92154
Luxury Model	81722

2) Activity rate

	Activity rate
Material handling (3996/74)	54 per move
Quality control (29880/360)	83 per inspection
Machine maintenance (140000/10000)	14 per MH

3) Overhead assigned to Basic Model

	Basic Model
Material handling (54*21)	1134
Quality control	14940
Machine maintenance	74200
Total	90274

4) Overhead assigned to Luxury Model

	Basic Model
Material handling (54*53)	2862
Quality control	14940
Machine maintenance	65800
Total	83602

5) ABC system