Hazelnut Corp. manufactures lawn ornaments. It currently has two product lines, the basic and the luxury. Hazelnut has a total of $164,775 in overhead. The company has identified the following information about its overhead activity cost pools and the two product lines: Cost Assigned Activity Cost Pools Cost Driver to Pool Materials handling Number of moves $ 2,940 Quality control Number of inspections $ 34,435 Machine maintenance Number of machine hours $127,400 Quantity/Amount Quantity/Amount Consumed by Consumed by Basic Luxury 29 moves 31 moves 240 inspections 120 inspections 5,000 machine hours 4,100 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 intermediate calculations and round your final answers to the nearest whole dollar amount.) Basic Model Luxury Model Overhead Assigned Overhead Assigned 2. Calculate the activity rates for each cost pool in Hazelnut's ABC system. (Round your answers to the nearest whole dollar.) Activity Rates Materials Handling Quality Control Machine Maintenance per Move per Inspection per Machine Hour 3. Calculate the amount of overhead that Hazelnut will assign to the basic line if it uses an ABC system. (Round your intermediate and final answers to the nearest whole dollar.) Basic Model Materials Handling Quality Control Machine Maintenance Total Overhead Assigned 4. Determine the amount of overhead Hazelnut will assign to the luxury line if it uses an ABC system. (Round your intermediate and final answers to the nearest whole dollar.) Luxury Model Materials Handling Quality Control Machine maintenance Total Overhead Assigned $ 5. Compare the results for a traditional system with that of an ABC system. Which do you think is more accurate? O Traditional System O ABC System Harbour Company makes two models of electronic tablets, the Home and the Work. Basic production information follows: Direct materials cost per unit Direct labor cost per unit Sales price per unit Expected production per month Home Work $ 38 $ 66 25 30 571 700 units 450 units 370 Harbour has monthly overhead of $205,440, which is divided into the following cost pools: Setup costs Quality control Maintenance Total $ 89,040 58,800 57,600 $ 205,440 The company has also compiled the following information about the chosen cost drivers: Home Number of setups 35 Number of inspections 320 Number of machine hours 1,300 Work 71 380 1,900 Total 106 700 3,200 Required: 1. Suppose Harbour uses 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 Home Model: Work Model: Total Overhead Cost $ 2. Calculate the production cost per unit for each of Harbour's products under a traditional costing system. (Round your intermediate calculations and final answers to 2 decimal places.) Home Work Unit Cost 3. Calculate Harbour's gross margin per unit for each product under the traditional costing system. (Round your intermediate calculations and final answers to 2 decimal places.) Home Work Gross Margin 4. Select the appropriate cost driver for each cost pool and calculate the activity rates if Harbour wanted to implement an ABC system. Setup Costs Quality Control Maintenance 5. Assuming an ABC system, assign overhead costs to each product based on activity demands. Overhead Assigned To Home Overhead Assigned To Work Setup Costs Quality Control Maintenance Total Overhead Cost $ 0 $ 0 6. Calculate the production cost per unit for each of Harbour's products in an ABC system. (Round your intermediate calculations and final answers to 2 decimal places.) Home Work Unit Cost 7. Calculate Harbour's gross margin per unit for each product under an ABC system. (Round your intermediate calculations and final answers to 2 decimal places.) Home Work Gross Margin 8. Compare the gross margin of each product under the traditional system and ABC. (Round your answers to 2 decimal places.) Home Work Gross Margin (Traditional) Gross Margin (ABC)
