Hazelnut Corporation manufactures lawn ornaments. It currently has two product lines, the basic and the luxury. Hazelnut has a total of $197,784 in overhead.

The company has identified the following information about its overhead activity pools and the two product lines:

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.
2. Calculate the activity rates for each activity pool in Hazelnuts ABC system.
3. Calculate the amount of overhead that Hazelnut will assign to the basic line if it uses an ABC system.
4. Determine the amount of overhead Hazelnut will assign to the luxury line if it uses an ABC system.
5. Compare the results for a traditional system with that of an ABC system. Which do you think is more accurate?

Activity Pools	Cost Driver	Cost Assigned to Pool	Quantity or Amount Consumed by Basic	Quantity or Amount Consumed by Luxury
Materials handling	Number of moves	$ 3,294	25	moves	36	moves
Quality control	Number of inspections	$ 35,490	240	inspections	120	inspections
Machine maintenance	Number of machine hours	$ 159,000	5,200	machine hours	5,400	machine hours