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3 (12 marks) Barnes Corporation manufactures two models of office chairs, a standard and a deluxe model. The following activity and cost information has been
3 (12 marks) Barnes Corporation manufactures two models of office chairs, a standard and a deluxe model. The following activity and cost information has been compiled: Number of Product Set-ups Standard 22 Deluxe 28 Overhead costs $30 000 Required: Number of Components 8 12 $60 000 Number of Direct Labour Hours 500 300 a) Assume a traditional costing system applies the $90 000 of overhead costs based on direct labour hours. What is the total amount of overhead costs assigned to the standard model? (2 marks) b) Assume a traditional costing system applies the $90 000 of overhead costs based on direct labour hours. What is the total amount of overhead costs assigned to the deluxe model? (1 mark) Number of set-ups and number of components are identified as activity-cost drivers for overheads. c) Assuming an activity-based costing system is used, what is the total amount of overhead costs assigned to the standard model? (3 marks) d) Assuming an activity-based costing system is used, what is the total amount of overhead costs assigned to the deluxe model? (3 marks) e) Comment on your findings from a) to d)
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