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Exercise 5 - 2 6 Volume - Based Cost Driver versus ABC ( LO 5 - 1 , 5 - 2 , 5 - 4

Exercise 5-26 Volume-Based Cost Driver versus ABC (LO 5-1,5-2,5-4)
Tioga Company manufactures sophisticated lenses and mirrors used in large optical telescopes. The company is now preparing its
annual profit plan. As part of its analysis of the profitability of individual products, the controller estimates the amount of overhead that
should be allocated to the individual product lines from the following information.
The total budgeted material-handling cost is $75,600.
Required:
Under a costing system that allocates overhead on the basis of direct-labor hours, the material-handling costs allocated to one lens
would be what amount?
Under a costing system that allocates overhead on the basis of direct-labor hours, the material-handling costs allocated to one
mirror would be what amount?
Under activity-based costing (ABC), the material-handling costs allocated to one lens would be what amount? The cost driver for the
material-handling activity is the number of material moves.
Under activity-based costing (ABC), the material-handling costs allocated to one mirror would be what amount? The cost driver for
the material-handling activity is the number of material moves.
(For all requirements, do not round your intermediate calculations and round your final answers to the nearest whole dollar.)
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