Hazelnut Corp. manufactures lawn ornaments. It currently has two product lines, the basic and the luxury. Hazelnut has a total of $155,032 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 $3,752 19 moves 48 moves Quality control Number of inspections $31,680 220 inspections 110 inspections Machine maintenance Number of machine hours $119,600 5,500 machine hours 3,700 machine hours 1. Required: 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.) Overhead Assigned for Basic Model: Overhead Assigned for Luxury Model: Calculate the activity rates for each cost pool in Hazelnut’s ABC system. (Round your answers to the nearest whole dollar.) Materials Handling Activity Rate per Move: Quality Control Activity Rate per Inspection: Machine Maintenance Activity Rate per Machine Hour: 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: Basic Model Quality Control: Basic Model Machine Maintenance: Basic Model Total Overhead Assigned: 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.) Luxury Model Materials Handling: Luxury Model Quality Control: Luxury Model Machine Maintenance: Luxury Model Total Overhead Assigned: Compare the results for a traditional system with that of an ABC system. Which do you think is more accurate? Traditional System or ABC System

Hazelnut Corp. manufactures lawn ornaments. It currently has two product lines, the basic and the luxury. Hazelnut has a total of $155,032 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 $3,752 19 moves 48 moves Quality control Number of inspections $31,680 220 inspections 110 inspections Machine maintenance Number of machine hours $119,600 5,500 machine hours 3,700 machine hours 1. Required: 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.) Overhead Assigned for Basic Model: Overhead Assigned for Luxury Model: Calculate the activity rates for each cost pool in Hazelnut’s ABC system. (Round your answers to the nearest whole dollar.) Materials Handling Activity Rate per Move: Quality Control Activity Rate per Inspection: Machine Maintenance Activity Rate per Machine Hour: 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: Basic Model Quality Control: Basic Model Machine Maintenance: Basic Model Total Overhead Assigned: 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.) Luxury Model Materials Handling: Luxury Model Quality Control: Luxury Model Machine Maintenance: Luxury Model Total Overhead Assigned: Compare the results for a traditional system with that of an ABC system. Which do you think is more accurate? Traditional System or ABC System

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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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 $155,032 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	$3,752	19 moves	48 moves
Quality control	Number of inspections	$31,680	220 inspections	110 inspections
Machine maintenance	Number of machine hours	$119,600	5,500 machine hours	3,700 machine hours

Required:
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.)

Overhead Assigned for Basic Model:

Overhead Assigned for Luxury Model:

Calculate the activity rates for each cost pool in Hazelnut’s ABC system. (Round your answers to the nearest whole dollar.)

Materials Handling Activity Rate per Move:

Quality Control Activity Rate per Inspection:

Machine Maintenance Activity Rate per Machine Hour:

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:

Basic Model Quality Control:

Basic Model Machine Maintenance:

Basic Model Total Overhead Assigned:

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.)

Luxury Model Materials Handling:

Luxury Model Quality Control:

Luxury Model Machine Maintenance:

Luxury Model Total Overhead Assigned:

Compare the results for a traditional system with that of an ABC system. Which do you think is more accurate?

Traditional System

ABC System

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