Question

Schell Company manufactures automobile floor mats. It currently has two product lines, the Standard and the Deluxe. Suppose that Schell has conducted further research into its overhead and potential cost drivers. As a result, the company has compiled the following detailed information, breaking total overhead into three cost pools: Cost Quantity/Amount Quantity/Amount Assigned Consumed by Consumed by Activity Cost Pools Cost Driver to Pool Standard Floor Mat Line Deluxe Floor Mat Line Material handling Number of moves $ 3,750 30 moves 70 moves Quality control Number of inspections $13,860 400 inspections 600 inspections Machine maintenance Number of machine hours $21,450 4,150 machine hours 3,000 machine hours Required: 1. Calculate the activity rates for each cost pool assuming Schell uses an ABC system 2. Calculate the amount of overhead that Schell will assign to the Standard floor mat line. 3. Determine the amount of overhead Schell will assign to the Deluxe product line. Complete this question by entering your answers in the tabs below. $ Reg 1 Reg 2 and 3 Calculate the activity rates for each cost pool assuming Schell uses an ABC system. (Round your answers to 2 decimal places.) Material Handling Quality Control Machine maintenance Activity Rate per Material Move per Inspection per Machine Hour is egt Req 2 and 3 >

Answer 1

1) Calculate of each activity rates for each cost pool assuming schell uses an ABC system * * Material handling Quantity control Machine maintenance $3750/(30+70) = $3750/100 = $37.5 Per material moves $13860/(400+600) = $13860/1000 = $13.86 Per inception $21450/(4150+3000) = $21450/7150 = $3 Per machine hour * Material handling Quantity control Machine maintenance Activity Rate $37.5 Per material moves $13.86 Per inception $3 Per machine hour 2) Calculate the amount of over head that schell will assign to the standard floor mat line. Material handling $37.5 * 30 = $1125 Quantity control $13.86 * 400 = $5544 Machine maintenance $3 * 4150 = $12450 Total over head assigned $1125 + $5544 +$12450 = $19119

3) Determine the amount of over head schell will assign to the deluxe product line Material handling $37.5 * 70 = $2625 Quantity control $13.86 * 600 = $8316 Machine maintenance $3 * 3000 = $9000 Total over head assigned $2625 + $8316 + $9000 = $19941 Total over head assigned 2) standard floor matline 3) Deluxe product line $19,119 $19,941