Question

Carlise Corp., which manufactures ceiling fans, curently has hvo product lines, the Indoor and the Outdoor. Carlise has total overhead of $138,341 Carlise has identified the following information about its averhead activity cost pools and the two praduct lines: Cost Assigned Quantity Amount Consumed Quantity Amount Consumed Cost Diver Actvity (ost Pools Malerials handlin Quelity control Machine maintenance Number of moves Number of inspections Number ot machine hous to Pool $ 21,721 $80,850 hy Indoor Line 560 oves 5,500 inspections by Outdoor Lne 510 moves 5,000 inspections 0 machine hours 35 7 D machine hours Required: 1. Suppose Carlise used a tracitional 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.) Overhead Assigned Indoor Model Cutcioo Model Total 2. Calculate the activity proportions for each cost pool in Carlise's ABC system. (Round your answers to 2 declmal places.) Activity Indoor Line Outdoor Line Malerials Handling Quality Control Machine maintenance % % % per Move per Inspection per Machine Hour 3. Calculate the amount of overhead that Carlse wll assign to the Indoor line if It uses an ABC system. (Round your Intermedlate calculations to 2 declmal places and round your final answers to the nearest whole dollar amount.) Indoor Model Materials Handling Quality Control Machine maintenance Total Overheed Assigned 4. Determine the amount of overhead Carlise wil assign to the Outdoor line if it uses an ABC system. (Round your intermediate calculations to 2 decimal places and round your final answers to the nearest whole dollar amount.) Outdoor Model Materials Handling Quality Control Machine maintenance ptal Assigned 5. Compare the results for a traditional system with an ABC system. Which do you think is more accurate? Traditional Syslem AHC System

Answer 1

1.

	Overhead Assigned
Indoor Model	53642
Outdoor Model	84699
Total	138341

Indoor Model = $138341 x 19000/(19000 + 30000) = $53642

Outdoor Model = $138341 x 30000/(19000 + 30000) = $84699

2.

	Activity Proportions
	Indoor Line	Outdoor Line
Materials Handling	52.34%	47.66%	per Move
Quality Control	52.38%	47.62%	per Inspection
Machine maintenance	38.78%	61.22%	per Machine Hour

3.

Indoor Model
Materials Handling	11369
Quality Control	42349
Machine maintenance	13872
Total Overhead assigned	67590

4.

Outdoor Model
Materials Handling	10352
Quality Control	38501
Machine maintenance	21898
Total Overhead assigned	70751

5. ABC System