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Hazelnut Corp. manufactures lawn ornaments. It currently has two product lines, the basic and the luxury. Hazelnut has a total of $144,020 in overhead.
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The company has identified the following information about its overhead activity cost pools and the two product lines:
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Activity Cost Pools
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Cost Driver
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Cost Assigned
to Pool
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Quantity/Amount Consumed by
Basic
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Quantity/Amount Consumed by
Luxury
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Materials handling
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Number of
moves
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$
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3,315
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22 moves
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43 moves
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Quality control
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Number of inspections
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$
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30,705
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180 inspections
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165 inspections
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Machine maintenance
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Number of
machine hours
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$
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110,000
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4,600 machine hours
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5,400 machine hours
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Basic Model
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Overhead Assigned
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Luxury Model
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Overhead Assigned
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Required:
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1.
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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 your intermediate calculations.)
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2.
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Calculate the activity rates for each cost pool in Hazelnut's ABC system.
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Activity Rates
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Materials Handling
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Per Move
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Quality Control
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Per Inspection
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Maintenance
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Per Machine Hour
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3. Calculate the amount of overhead that Hazelnut will assign to the basic line if it uses an ABC system.
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Basic Model
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Materials Handling
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Quality Control
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Maintenance
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Total Overhead Assigned
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4. Determine the amount of overhead Hazelnut will assign to the luxury line if it uses an ABC system.
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Luxury Model
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Materials Handling
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Quality Control
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Maintenance
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Total Overhead Assigned
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