Hazelnut Corp. manufactures lawn ornaments. It currently has two product lines, the basic and the luxury. Hazelnut has a total of $181,224 in overhead. The company has identified the following information about its overhead activity cost pools and the two product lines: Activity Cost Pools Cost Driver Cost Assigned to Pool Quantity/Amount Consumed by Basic Quantity/Amount Consumed by Luxury Materials handling Number of moves $ 3,944 24 moves 44 moves Quality control Number of inspections $ 31,680 220 inspections 110 inspections Machine maintenance Number of machine hours $ 145,600 5,800 machine hours 4,600 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 Luxury Model overhead assigned 2. Calculate the activity rates for each cost pool in Hazelnut’s ABC system. (Round your answers to the nearest whole dollar.) Activity Rates Materials Handling per Move Quality Control per Inspection Machine Maintenance per Machine Hour 3. Calculate the amount of overhead that Hazelnut will assign to the basic line if it uses an ABC system. (Round your intermediate and final answers to the nearest whole dollar.) Basic Model Materials Handling Quality Control Machine Maintenance Total Overhead Assigned $0
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.
Hazelnut Corp. manufactures lawn ornaments. It currently has two product lines, the basic and the luxury. Hazelnut has a total of $181,224 in
The company has identified the following information about its overhead activity cost pools and the two product lines:
| Activity Cost Pools | Cost Driver | Cost Assigned to Pool |
Quantity/Amount Consumed by Basic |
Quantity/Amount Consumed by Luxury |
|||
| Materials handling | Number of moves | $ | 3,944 | 24 moves | 44 moves | ||
| Quality control | Number of inspections | $ | 31,680 | 220 inspections | 110 inspections | ||
| Machine maintenance | Number of machine hours | $ | 145,600 | 5,800 machine hours | 4,600 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 | |
| Luxury Model | overhead assigned |
2. Calculate the activity rates for each cost pool in Hazelnut’s ABC system. (Round your answers to the nearest whole dollar.)
|
3. Calculate the amount of overhead that Hazelnut will assign to the basic line if it uses an ABC system. (Round your intermediate and final answers to the nearest whole dollar.)
|
4. Determine the amount of overhead Hazelnut will assign to the luxury line if it uses an ABC system. (Round your intermediate and final answers to the nearest whole dollar.)
|
Trending now
This is a popular solution!
Step by step
Solved in 4 steps with 3 images
