Refer to your solutions obtained in E4-9 and E4-10.

Required:

1. Discuss the costs and benefits to Matson of moving from a traditional costing system to an ABC system.

2. Compare the results of each potential traditional costing system to those obtained in the ABC approach.

Data from E4-10

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

Data from E4-9

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 over- head 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.

Transcribed Image Text:

Cost Activity Pools Material Handling moves Assigned Cost Driver to Pool $ 2,500 Quality Control Machine Maintenance # inspections $ 9,240 $14,300 # machine hrs Quantity/Amount Consumed by Quantity/Amount Consumed by Standard Floor Mat Line Deluxe Floor Mat Line 40 moves 600 inspections 3,000 machine hours 60 moves 720 inspections 4,150 machine hours