Carlise has identified the following information about its overhead activity pools and the two product lines: Cost Assigned Quantity or Amount Consumed by to Pool Indoor Line $ 20,910 $ 85,120 $ 34,790 Activity Pools Materials handling Quality control Machine maintenance Complete this question by entering your answers in the tabs below. Outdoor Model Cost Driver Number of moves Number of inspections Number of machine hours Required: 1. Suppose Carlise used a traditional costing system with machine hours as the cost driver. Determine the amount of overhead assigned to each product line. 2. Calculate the activity proportions for each activity pool in Carlise's ABC system. 3. Calculate the amount of overhead that Carlise will assign to the Indoor line if it uses an ABC system. 4. Determine the amount of overhead Carlise will assign to the Outdoor line if it uses an ABC system. 5. Compare the results for a traditional system with an ABC system. Which do you think is more accurate? Materials Handling Quality Control Required 1 Required 2 Required 3 Required 4 Required 5 Determine the amount of overhead Carlise will assign to the Outdoor line if it uses an ABC system. Note: Round your intermediate calculations to 2 decimal places and round your final answers to the nearest whole dollar amount. Maintenance Total Overhead Assigned 570 moves 6,100 inspections 28,000 machine hours < Required 3 Quantity or Amount Consumed by Outdoor Line Required 5 > 450 moves 5,100 inspections 21,000 machine hours
Carlise has identified the following information about its overhead activity pools and the two product lines: Cost Assigned Quantity or Amount Consumed by to Pool Indoor Line $ 20,910 $ 85,120 $ 34,790 Activity Pools Materials handling Quality control Machine maintenance Complete this question by entering your answers in the tabs below. Outdoor Model Cost Driver Number of moves Number of inspections Number of machine hours Required: 1. Suppose Carlise used a traditional costing system with machine hours as the cost driver. Determine the amount of overhead assigned to each product line. 2. Calculate the activity proportions for each activity pool in Carlise's ABC system. 3. Calculate the amount of overhead that Carlise will assign to the Indoor line if it uses an ABC system. 4. Determine the amount of overhead Carlise will assign to the Outdoor line if it uses an ABC system. 5. Compare the results for a traditional system with an ABC system. Which do you think is more accurate? Materials Handling Quality Control Required 1 Required 2 Required 3 Required 4 Required 5 Determine the amount of overhead Carlise will assign to the Outdoor line if it uses an ABC system. Note: Round your intermediate calculations to 2 decimal places and round your final answers to the nearest whole dollar amount. Maintenance Total Overhead Assigned 570 moves 6,100 inspections 28,000 machine hours < Required 3 Quantity or Amount Consumed by Outdoor Line Required 5 > 450 moves 5,100 inspections 21,000 machine hours
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Concept explainers
Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
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Transcribed Image Text:**Overhead Cost Allocation Analysis**
Carlisle has identified the following information about its overhead activity pools and two product lines:
**Activity Pools:**
1. **Materials Handling**
- **Cost Driver:** Number of moves
- **Cost Assigned to Pool:** $20,910
- **Indoor Line:**
- Quantity/Amount Consumed: 570 moves
- **Outdoor Line:**
- Quantity/Amount Consumed: 450 moves
2. **Quality Control**
- **Cost Driver:** Number of inspections
- **Cost Assigned to Pool:** $85,120
- **Indoor Line:**
- Quantity/Amount Consumed: 6,100 inspections
- **Outdoor Line:**
- Quantity/Amount Consumed: 5,100 inspections
3. **Machine Maintenance**
- **Cost Driver:** Number of machine hours
- **Cost Assigned to Pool:** $34,790
- **Indoor Line:**
- Quantity/Amount Consumed: 28,000 machine hours
- **Outdoor Line:**
- Quantity/Amount Consumed: 21,000 machine hours
**Required Analysis:**
1. **Traditional Cost System:**
- Using machine hours as the cost driver, determine the overhead assigned to each product line.
2. **Activity Proportions in ABC System:**
- Calculate the activity proportions for each activity pool in Carlisle’s ABC (Activity-Based Costing) system.
3. **Indoor Line Overhead (ABC System):**
- Calculate the overhead assigned to the Indoor line if using an ABC system.
4. **Outdoor Line Overhead (ABC System):**
- Calculate the overhead assigned to the Outdoor line if using an ABC system.
5. **Comparison of Results:**
- Compare the results of the traditional system with the ABC system and determine which is more accurate.
**Instructions for the Analysis:**
- Complete the questions by entering answers in the tabs provided for each requirement.
- For the Outdoor Line, determine overhead using the ABC system. Round calculations to two decimal places and final answers to the nearest whole dollar.
**Note:** Use the 'Outdoor Model' section to fill in the overhead assignment for Materials Handling, Quality Control, and Maintenance.
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