Answered step by step
Verified Expert Solution
Question
1 Approved Answer
PA4-1 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
PA4-1 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 $175.910 in overhead. The company has identified the following information about its overhead activity cost pools and the two product lines: Cost Quantity/Amount ConsumedQuantity/Amount Consumed / Assigned by by Activity Cost Pools Cost Driver to Pool Basic Luxury Materials handling Number of moves $ 4,050 28 moves 47 moves Quality control Number of inspections $ 36,660 250 inspections 140 inspections Machine maintenance Nurnber of machine hours $ 135,200 5,100 machine heurs 5,300 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 Overhead Assigned Overhead Assigned Luxury Model 2. Calculate the activity rates for each cost pool in Hazelnut's ABC system. Materials Handling Quality Control Activity Rates per Move per Inspection per Machine Hour Machine Maintenance 3. Calculate the amount of overhead that Hazelnut will assign to the basic line if it uses an ABC system. 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. 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? Traditional System O ABC System
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started