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Brad's Robot Supply Corporation manufactures two models of Robots, a standard and a Super model. The following activity and cost information has been compiled: Product
Brad's Robot Supply Corporation manufactures two models of Robots, a standard and a Super model. The following activity and cost information has been compiled: Product Standard Super Number of Setups 8 7 Number of Components 56 34 Number of Direct Labor Hours 600 300 There are $180,000 in total overhead costs. 25% of these costs are Setup costs. a Assume a traditional costing system applies the $180,000 of overhead costs based on direct labor hours. a. What is the total amount of overhead costs assigned to the standard model? b. What is the total amount of overhead costs assigned to the Super model? Assume an activity-based costing system is used and that the number of setups and the number of components are identified as the activity-cost drivers for overhead. c. What is the total amount of overhead costs assigned to the standard model? d. What is the total amount of overhead costs assigned to the Super model? e. Explain the difference between the costs obtained from the traditional costing system and the ABC system. Which system provides a better estimate of costs? Why
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