Question

Julio 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 Deluxe Model 27,000 32,000 650 950 120 600 Total estimated overhead costs are $394,160, of which $176,000 is assigned to the material handling cost pool and $218,160 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

Answer 1

1
	Overhead Assigned
Standard model	180379	or 180378
Deluxe model	213782
2
	Overhead Assigned
Standard model	107860
Deluxe model	286300

Workings:
1
Overhead rate	6.6807	=394160/(27000+32000)
Overhead Assigned:
Standard model	180379	=27000*6.6807
Deluxe model	213782	=32000*6.6807
2
Activity rates:
Material handling	110	=176000/(650+950)
Setup	303	=218160/(120+600)
Overhead Assigned:
Standard model	107860	=(650*110)+(120*303)
Deluxe model	286300	=(950*110)+(600*303)