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Carlise Corp., which manufactures ceiling fans, currently has two product lines, the Indoor and the Outdoor. Carlise has total overhead of $139,400. Carlise has identified
Carlise Corp., which manufactures ceiling fans, currently has two product lines, the Indoor and the Outdoor. Carlise has total overhead of $139,400. Carlise has identified the following information about its overhead activity cost pools and the two product lines: Activity Cost Pools Cost Driver Materials handling Number of moves Quality control Number of inspections Machine maintenance Number of machine hours Cost Quantity/Amount Assigned consumed by Indoor Consumed by Outdoor to Pool Line Line $ 20,000 575 moves 425 moves $ 82,500 6,000 inspections 4,000 inspections $ 36,900 21,000 machine hours 20,000 machine hours 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. (Do not round intermediate calculations and round your final answers to the nearest whole dollar amount.) Overhead Assigned Indoor Model Outdoor Model Total $ 0 2. Calculate the activity proportions for each cost pool in Carlise's ABC system. (Do not round intermediate calculations. Round your answers to 2 decimal places.) Indoor Line Materials Handling Quality Control Machine Maintenance Activity Proportions Outdoor Line % per Move % per Inspection % per Machine Hour 3. Calculate the amount of overhead that Carlise will assign to the Indoor line if it uses an ABC system. (Round your intermediate calculations and final answers to 2 decimal places.) Indoor Model Materials Handling Quality Control Machine maintenance Total Overhead Assigned $ 4. Determine the amount of overhead Carlise will assign to the Outdoor line if it uses an ABC system. (Round your intermediate calculations and final answers to 2 decimal places.) Outdoor Model Materials Handling Quality Control Machine maintenance Total Overhead Assigned $ 5. Compare the results for a traditional system with an ABC system. Which do you think is more accurate? Traditional System ABC System
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