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Bunker makes two types of briefcases, fabric and leather. The company is currently using a traditional costing system with labor hours as the cost
Bunker makes two types of briefcases, fabric and leather. The company is currently using a traditional costing system with labor hours as the cost driver but is considering switching to an activity-based costing system. In preparation for the possible switch, Bunker has identified two activity pools: materials handling and setup. Pertinent data follow Number of labor hours Number of material moves Number of setups Fabric Case 20,000 Leather Case 10,000 1,131 156 819 84 Total estimated overhead costs are $315,900, of which $253,500 is assigned to the materials handling pool and $62,400 is assigned to the setup pool Required: 1. Calculate the overhead assigned to the fabric case using the traditional costing system based on labor hours. 2. Calculate the overhead assigned to the fabric case using ABC. 3. Was the fabric case over- or undercosted by the traditional cost system compared to ABC? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 31 Calculate the overhead assigned to the fabric case using the traditional costing system based on labor hours. Note: Do not round intermediate calculations and round your final answer to the nearest whole dollar amount. Overhead Assigned Required 1 Required 2 Required 3 Calculate the overhead assigned to the fabric case using ABC. Note: Round activity rates or activity proportions and intermediate calculations to four decimal places. Round your final answer to the nearest whole dollar. Overhead Assigned Required 1 Required 2 Required 3 Was the fabric case over- or undercosted by the traditional cost system compared to ABC? Fabric Case Over-costed Under-costed
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