Question

Jullo produces two types of calculator, standard and deluxe. The company is currently using a traditional costing system with machine hours as the cost driver but is considering a move to activity-based costing. In preparing for the possible switch, Julio has Identified two cost pools: materials handling and setup. The collected data follow: Number of machine hours Number of material moves Number of setups Standard Model 25,7ee 585 85 Deluxe Model 30,7ee 885 535 Total estimated overhead costs are $362,930, of which $183,750 is assigned to the material handling cost pool and $179,180 IS assigned to the setup cost pool. Required: 1. Calculate the overhead assigned to each product using the traditional cost system. 2. Calculate the overhead assigned to each product using ABC. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Calculate the overhead assigned to each product using the traditional cost system. (Round the overhead rate to four decimal places and round your final answer to the nearest whole dollar amount.) Overhead Assigned Standard Model Deluxe Model < Required 1 Required 2 >

Answer 1

1
Calculate predetermined overhead rate under traditional cost system
Predetermined overhead rate	Total manufacturing overhead/Number of machine hours
Predetermined overhead rate	362930/(25700+30700)
Predetermined overhead rate	362930/56400
Predetermined overhead rate	$6.4349
Calculate overhead assigned to each product
Standard model	$165,377	25700*6.4349
Deluxe model	$197,551	30700*6.4349
2
Material handling activity rate	183750/(585+885)
Material handling activity rate	183750/1470
Material handling activity rate	$125.00
Setup activity rate	179180/(85+535)
Setup activity rate	179180/620
Setup activity rate	$289.00
Overhead assigned
Standard model	$97,690	(585*125)+(85*289)
Deluxe model	$265,240	(885*125)+(535*289)