1) Overhead rate = Total estimated overhead / Total Direct labor hours
= 150,000 / (15,000 + 9,000)
= 150,000 / 24,000 = $6.25
Overhead assigned to fabric case = Direct labor hours * overhaed rate
= 15,000 * $6.25
= $93,750
2) Overhaed assigned to fabric case using ABC:
Material handling cost = (Total cost / Total material moves) * Fabric case material moves
= (110,000 / 1,100) * 440
= $44,000
Setup Cost = (Total cost / Total setups) * Fabric case setups
= ($40,000 / 120) * 40
= $13,333.33
Total Overehead = $44,000 + $13,333.33
= $57,333.33
3) Fabric case was Over costed under traditional costing system as compared to ABC.
($93,750 - $57,333.33) = $36,416.67
Required information Bunker makes two types of briefcase, fabric and leather. The company is currently using...
Required information Bunker makes two types of briefcase, fabric and leather. The company is currently using a traditional costing system with labor hours as the cost driver but is considering switching to an activity-based costing system. In preparation for the possible switch, Bunker has identified two activity cost pools: materials handling and setup. Pertinent data follow: Number of labor hours Number of material moves Number of setups Fabric Case Leather Case 18,000 12,000 765 935 57 133 Total estimated overhead...
Required information Bunker makes two types of briefcase, fabric and leather. The company is currently using a traditional costing system with labor hours as the cost driver but is considering switching to an activity-based costing system. In preparation for the possible switch, Bunker has identified two activity cost pools: materials handling and setup. Pertinent data follow. Number of labor hours Number of material moves Number of setups Fabric Case Leather Case 15,000 10,000 570 60 930 90 Total estimated overhead...
Required information Bunker makes two types of briefcase, fabric and leather. The company is currently using a traditional costing system with labor hours as the cost driver but is considering switching to an activity-based costing system. In preparation for the possible switch, Bunker has identified two activity cost pools: materials handling and setup. Pertinent data follow: Fabric Case Leather Case Number of labor hours 14,000 6,000 Number of material moves 504 696 Number of setups 27 63 Total estimated overhead...
Required information Bunker makes two types of briefcase, fabric and leather. The company is currently using a traditional costing system with labor hours as the cost driver but is considering switching to an activity-based costing system. In preparation for the possible switch, Bunker has identified two activity cost pools: materials handling and setup. Pertinent data follow: Number of labor hours Number of material moves Number of setups Fabric Case Leather Case 15,000 10,000 570 930 60 90 Total estimated overhead...
Required information Bunker makes two types of briefcase, fabric and leather. The company is currently using a traditional costing system labor hours as the cost driver but is considering switching to an activity-based costing system. In preparation for the possible switch, Bunker has identified two activity cost pools: materials handling and setup. Pertinent data follow: Number of labor hours Number of material moves Number of setups Fabric Case 18,000 660 63 Leather Case 7,000 990 117 Total estimated overhead costs...
Bunker makes two types of briefcase, fabric and leather. The company is currently using a traditional costing system with labor hours as the cost driver but is considering switching to an activity-based costing system. In preparation for the possible switch, Bunker has identified two activity cost pools: materials handling and setup. Pertinent data follow. Number of labor hours Number of material moves Number of setupe Fabric Case Leather Case 16,000 9.000 820 1,230 91 169 Total estimated overhead costs are...
Required information Bunker makes two types of briefcase, fabric and leather. The company is currently using a traditional costing system with labor hours as the cost driver but is considering switching to an activity-based costing system. In preparation for the possible switch, Bunker has identified two activity cost pools: materials handling and setup. Pertinent data follow: Number of labor hours Number of material moves Number of setups Fabric Case 28,000 660 90 Leather Case 7,000 1,340 160 Total estimated overhead...
Required information Bunker makes two types of briefcase, fabric and leather. The company is currently using a traditional costing system with labor hours as the cost driver but is considering switching to an activity-based costing system. In preparation for the possible switch, Bunker has identified two activity cost pools: materials handling and setup. Pertinent data follow. Number of labor hours Number of material moves Number of setups Fabric Case 15,000 440 40 Leather Case 9,000 660 80 Total estimated overhead...
Bunker makes two types of briefcase, fabric and leather. The company is currently using a traditional costing system with labor hours as the cost driver but is considering switching to an activity-based costing system. In preparation for the possible switch, Bunker has identified two activity cost pools: materials handling and setup. Pertinent data follow: Number of labor hours Number of material moves Number of setups Fabric Case 18,000 700 40 Leather Case 13,000 1,050 160 Total estimated overhead costs are...
Required information Bunker makes two types of briefcase, fabric and leather. The company is currently using a traditional costing system with labor hours as the cost driver but is considering switching to an activity-based costing system. In preparation for the possible switch, Bunker has identified two activity cost pools: materials handling and setup. Pertinent data follow: Number of labor hours Number of material moves Number of setups Fabric Case Leather Case 18,000 7,000 700 1,050 130 1,050 70 Total estimated...