Question
Hazelnut Corp. manufactures lawn ornaments. It currently has two product lines, the basic and the luxury. Hazelnut has a total of $170,069 in overhead. The
Hazelnut Corp. manufactures lawn ornaments. It currently has two product lines, the basic and the luxury. Hazelnut has a total of $170,069 in overhead. |
The company has identified the following information about its overhead activity cost pools and the two product lines: |
Activity Cost Pools | Cost Driver | Cost Assigned to Pool | Quantity/Amount Consumed by Basic | Quantity/Amount Consumed by Luxury | |||
Materials handling | Number of moves |
| $ | 4,234 |
| 23 moves | 50 moves |
Quality control | Number of inspections |
| $ | 28,035 |
| 240 inspections | 75 inspections |
Machine maintenance | Number of machine hours |
| $ | 137,800 |
| 5,300 machine hours | 5,300 machine hours |
Required: | |
1. | Suppose Hazelnut 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 your intermediate calculations.) |
2. | Calculate the activity rates for each cost pool in Hazelnut?s ABC system. |
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3. | Calculate the amount of overhead that Hazelnut will assign to the basic line if it uses an ABC system. |
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4. | Determine the amount of overhead Hazelnut will assign to the luxury line if it uses an ABC system. |
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