Julio produces two types of calculator, standard and deluxe. The company is currently using a traditional costing system with machine hours as the cost driver but is considering a move to activity-based costing. In preparing for the possible switch, Julio has identified two cost pools: materials handling and setup. The collected data follow:
|
Standard Model |
Deluxe Model |
| Number of machine hours |
32,500 |
|
35,000 |
|
| Number of material moves |
380 |
|
580 |
|
| Number of setups |
70 |
|
475 |
|
|
Total estimated overhead costs are $263,000, of which $110,400 is assigned to the material handling cost pool and $152,600 is assigned to the setup cost pool.