Assigning Costs Using Traditional System, Assigning Costs Using Activity Proportions
Wildwind Corp. is the manufacturer of wind chimes. It currently has two product lines, the Clear Tone and the Bella. Wildwind has $61,200 in total overhead.
The company has identified the following information about its overhead activity pools and the two product lines.
|
| Cost Assigned to Pool | Quantity/Amount Consumed Clear Tone | Quantity/Amount Consumed Bella |
Activity Pools | Cost Driver | |||
Material handling | Number of | $15,300 | 235 moves | 275 moves |
Quality control | Number of | $28,900 | 578 inspections | 867 inspections |
Machine maintenance | inspections Number of | $17,000 | 18,000 machine | 16,000 machine |
| machine hours |
| hours | hours |
Required:
1.Suppose Wildwind used a traditional costing system with machine hours as the cost driver. Determine the amount of overhead assigned to each product line.
2. Calculate the activity proportions for each cost pool in Wildwind's ABC system.
3. Calculate the amount of overhead that Wildwind will assign to the ClearTone product line if it uses an ABC system.
4. Determine the amount of overhead Wildwind will assign to the Bella product line if it uses an ABC system.
5. Compare the results for a traditional system with those of an ABC system. Which do you think is more accurate and why?
We need at least 10 more requests to produce the solution.
0 / 10 have requested this problem solution
The more requests, the faster the answer.