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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 $154,734 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 Cost Driver Number of moves Number of inspections Number of machine hours Cost Assigned to Pool $ 3,774 $ 28,560 Quantity/Amount Consumed by Basic 22 moves 240 inspections Quantity/Amount Consumed by Luxury 52 moves 120 inspections Machine maintenance $ 122,400 5,900 machine hours 4,300 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 intermediate calculations and round your final answers to the nearest whole dollar amount.) Basic Model 89,503 Overhead Assigned 65,231 Overhead Assigned Luxury Model $ 2. Calculate the activity rates for each cost pool in Hazelnuts 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 $ 0 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 $ 0 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
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