Refer to E4-12.

Total estimated overhead costs are $150,000, of which $110,000 is assigned to the materials handling cost pool and $40,000 is assigned to the setup cost pool.

Required:

1. Calculate the overhead assigned to the leather case line using the traditional costing system based on direct labor hours.

2. Calculate the overhead assigned to the leather case line using ABC.

3. Was the leather case over- or under-costed by the traditional cost system compared to ABC?

Transcribed Image Text:

Fabric Case Leather Case Number of labor hours Number of material moves Number of setups 15,000 440 40 9,000 660 80