Question
Julio produces two types of calculators, standard and deluxe. The company is currently using a traditional costing system with machine hours as the cost driver
Julio produces two types of calculators, standard and deluxe. The company is currently using a traditional costing system with machine hours as the cost driver but is considering a move to activity-based costing. In preparing for the possible switch, Julio has identified two activity pools: materials handling and setup. The collected data follow:
Standard Model | Deluxe Model | |
---|---|---|
Number of machine hours | 25,200 | 30,200 |
Number of material moves | 560 | 860 |
Number of setups | 80 | 510 |
Total estimated overhead costs are $337,960, of which $170,400 is assigned to the materials handling pool and $167,560 is assigned to the setup pool.
Required:
Calculate the overhead assigned to each product using ABC.
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