Carlise has identified the following information about its overhead activity cost pools and the two product lines:

Required:
1. Suppose Carlise 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 Carlise's ABC system.
3. Calculate the amount of overhead that Carlise will assign to the Indoor line if it uses an ABC system.
4. Determine the amount of overhead Carlise will assign to the Outdoor line if it uses an ABC system.
5. Compare the results for a traditional system with an ABC system. Which do you think is more accurate and why?

Transcribed Image Text:

Cost Assigned to Pool Quantity/Amount Consumed by Indoor Line Quantity/Amount Consumed by Outdoor Line Activity Cost Pools Materials handling Quality control Machine Cost Driver 575 moves $20,000 $82,500 $36,900 Number of 425 moves moves Number of 6,000 inspections 4,000 inspections inspections 20,000 machine hours Number of 21,000 machine hours maintenance machine hours