Calculating Traditional Overhead Rates, Assigning Costs
Matson Company manufactures automobile floor mats. It currently has 2 product lines, the Standard and the Deluxe.
Matson has a total of $26,040 in overhead. It currently used a traditional cost system with overhead applied to the product on the basis of either direct labor (DL) hours or machine hours. Matson has compiled the following information about possible cost drivers and its two product lines.
| Quantity/Amount Consumed by Standard Floor Mat Line | Quantity/Amount Consumed by Deluxe Floor Mat Line |
Matson Company Total | ||
1,000 DL hours | 600 DL hours | 400 DL hours |
7,150 machine hours | 3,000 machine hours | 4,150 machine hours |
Required:
1.Suppose Matson used a traditional costing system with direct labor hours as the cost driver. Determine the amount of overhead assigned to each product line.
2. Suppose Matson used a traditional costing system with machine hours as the cost driver. Determine the amount of overhead assigned to each product line.
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