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PA4-1 (Algo) Assigning Costs Using Traditional System, ABC System [LO 4-1, 4-3, 4-4, 4-6] Hazelnut Corp. manufactures lawn ornaments. It currently has two product lines,
PA4-1 (Algo) Assigning Costs Using Traditional System, ABC System [LO 4-1, 4-3, 4-4, 4-6] Hazelnut Corp. manufactures lawn ornaments. It currently has two product lines, the basic and the luxury. Hazelnut has a total of $146,115 in overhead. The company has identified the following information about its overhead activity cost pools and the two product lines: Activity Cost Pools Materials handling Quality control Machine maintenance Cost Assigned to Pool $ 2,730 Cost Driver Number of moves Number of inspections Number of machine hours $ 31,185 $112,200 Quantity/Amount Consumed by Basic 25 moves 240 inspections 5,400 machine hours Quantity/Amount Consumed by Luxury 40 moves 120 inspections 4,800 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 $ 77,355 Overhead Assigned $ 68,760 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 $ 109 per Move Quality Control $ 130 per Inspection Machine Maintenance $ 21 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 2,725 Quality Control $ 31,200 Machine Maintenance $ 113,400 Total Overhead Assigned 147,325 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 $ 4,360 Quality Control $ 15,600 Machine maintenance $ 100,800 Total Overhead Assigned $ 120,760
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