Assigning Costs Using Activity Rates
Refer to the information given in E4-9 regarding Matson Company. Suppose that Matson 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 Assigned to Pool | Quantity/Amount Consumed by Standard Floor Mat Line | Quantity/Amount Consumed by Deluxe Floor Mat Line |
Activity Pools | Cost Driver | |||
Material Handling | # moves | $ 2,500 | 40 moves | 60 moves |
Quality Control | # inspections | $ 9,240 | 600 inspections | 720 inspections |
Machine | # machine | $14,300 | 3,000 machine | 4,150 machine |
Maintenance | hrs |
| hours | hours |
Required:
1.Calculate the activity rates for each cost pool assuming Matson uses an ABC system.
2. Calculate the amount of overhead that Matson will assign to the standard floor mat line.
3. Determine the amount of overhead Matson will assign to the deluxe product line.
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