Cotel Ltd., manufactures computer monitors and hard drives. Cotel has been accumulating manufacturing overhead costs into one cost pool, and charged $120 overhead cost to each unit of product. Cotel made 4,800 units of monitors and 3,200 units of hard drive last year. The cost accountant believes that there are significant differences in how each product line uses resources, and is considering using the ABC costing method to allocate the manufacturing overhead costs. She analyzes the manufacturing overhead costs and gathers the following information:

Activity Costs Cost Driver

30% of the overhead costs is for machine amortization Number of units

45% of the overhead costs is for material handling Number of times material moves

25% of the overhead costs is for design Number of designs

The Monitor Department has materials moved 160 times and 18 designs done, while the Hard Drive Department has materials moved 440 times and 12 designs done.

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Calculate the total manufacturing overhead costs allocated to the Monitor Department, using the traditional method: $

Calculate the total manufacturing overhead costs allocated to the Hard Drive Department, using the traditional method: $

Identify the cost hierarchy level for each activity:

Activity Cost Hierarchy

Machine amortization ["", "", "", ""]

Material handling ["", "", "", ""]

Design ["", "", "", ""]

Do not enter "," for your answers.

Activities Costs OH Rate

Calculate the total manufacturing overhead costs: $

Calculate the machine amortization costs: $ $

Calculate the material handling costs: $ $

Calculate the design costs: $ $

Based on each of the overhead rates calculated above, calculate each overhead cost allocated to the Monitor Department and the Hard Drive Department:

Manufacturing Overhead Monitor Department Hard Drive Department

Machine amortization $ $

Material handling $ $

Design $ $

Total $ $

Monitor DepartmentHard Drive DepartmentWhich department was over-allocated the overhead costs using the traditional method? ["", "", "", ""] ["", "", ""]