Question
Problem 8 - Clinton Company produces two products, Bill and Hillary. Overhead has traditionally been allocated on the basis of direct labor hours. Direct labor
Problem 8 - Clinton Company produces two products, Bill and Hillary. Overhead has traditionally been allocated on the basis of direct labor hours. Direct labor has an actual cost of $15 per labor hour. Clinton recently sat up 3 activity centers to implement ABC costing. Information concerning this follows:
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|
| Actual Activity | |
Estimated Activity | Estimated Cost | Bill | Hillary | |
Machine setups | 80 setups | $98,000 | 29 setups | 48 setups |
Molding | 20,000 sq. feet | $185,000 | 13,000 square feet | 7,000 square feet |
Packaging | 2,000 crates | $92,000 | 410 crates | 1,690 crates |
Direct labor | 7,110 hours | $108,701 | 2.6 hours per unit | 1.4 hours per unit |
Estimated volume | 2,000 units |
| 1,550 units | 2,200 units |
A. How much overhead is allocated to each Hillary under the traditional approach?
B. Determine the overhead allocated per unit to each HIllary under ABC.
C. List the names of which of the items provided for Clinton Company are cost pools under ABC.
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