Dunnstreet produces two types of calculator, standard and deluxe. The company is currently using a traditional costing system with machine hours as the cost driver but is considering a move to activity based costing. In preparing for the possible switch, Dunnstreet has identified two cost pools: materials handling and setup. The collected data follow:

Total estimated overhead costs are \($225,000\) of which \($70,000\) is assigned to the material handling cost pool and \($155,000\) is assigned to the setup cost pool.

Required:

1. Calculate the overhead assigned to each product using the traditional cost system. Round the overhead rate to four decimal places if necessary.

2. Calculate the overhead assigned to each product using ABC. Round activity rates to four decimal places if necessary.

Transcribed Image Text:

Number of machine hours Number of material moves Number of setups Standard Model Deluxe Model 25,000 30,000 550 850 80 500