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Hazelnut Corporation manufactures lawn ornaments. It currently has two product lines, the basic and the luxury. Hazelnut has a total of $171,500 in overhead. The company has identified the following information about its overhead activity pools and the two product lines: Activity Pools Materials handling Quality control Machine maintenance Required 1 Required 2 Complete this question by entering your answers in the tabs below. Cost Driver Number of moves Number of inspections Number of 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. 2. Calculate the activity rates for each activity pool in Hazelnut's ABC system. 3. Calculate the amount of overhead that Hazelnut will assign to the basic line if it uses an ABC system. 4. Determine the amount of overhead Hazelnut will assign to the luxury line if it uses an ABC system. 5. Compare the results for a traditional system with that of an ABC system. Which do you think is more accurate? Materials Handling Quality Control Machine Maintenance Total Overhead Assigned Required 3 Required 4 $ Cost Assigned to Quantity or Amount Consumed Quantity or Amount Consumed Pool by Basic 20 moves 250 inspections 5,000 machine hours Determine the amount of overhead Hazelnut will assign to the luxury line if it uses an ABC system. Luxury Model Required 5 < Required 3 $ 14,000 $ 37,500 $ 120,000 by Luxury 50 moves 125 inspections 5,000 machine hours Required 5 >

Hazelnut Corporation manufactures lawn ornaments. It currently has two product lines, the basic and the luxury. Hazelnut has a total of $171,500 in overhead. The company has identified the following information about its overhead activity pools and the two product lines: Activity Pools Materials handling Quality control Machine maintenance Required 1 Required 2 Complete this question by entering your answers in the tabs below. Cost Driver Number of moves Number of inspections Number of 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. 2. Calculate the activity rates for each activity pool in Hazelnut's ABC system. 3. Calculate the amount of overhead that Hazelnut will assign to the basic line if it uses an ABC system. 4. Determine the amount of overhead Hazelnut will assign to the luxury line if it uses an ABC system. 5. Compare the results for a traditional system with that of an ABC system. Which do you think is more accurate? Materials Handling Quality Control Machine Maintenance Total Overhead Assigned Required 3 Required 4 $ Cost Assigned to Quantity or Amount Consumed Quantity or Amount Consumed Pool by Basic 20 moves 250 inspections 5,000 machine hours Determine the amount of overhead Hazelnut will assign to the luxury line if it uses an ABC system. Luxury Model Required 5 < Required 3 $ 14,000 $ 37,500 $ 120,000 by Luxury 50 moves 125 inspections 5,000 machine hours Required 5 >

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Hazelnut Corporation manufactures lawn ornaments. It currently has two product lines, the basic and the luxury. Hazelnut has a total of $171,500 in overhead. The company has identified the following information about its overhead activity pools and the two product lines: Activity Pools Materials handling Quality control Machine maintenance 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. 2. Calculate the activity rates for each activity pool in Hazelnut's ABC system. Required 1 Cost Driver Number of moves Number of inspections Number of machine hours 3. Calculate the amount of overhead that Hazelnut will assign to the basic line if it uses an ABC system. 4. Determine the amount of overhead Hazelnut will assign to the luxury line if it uses an ABC system. 5. Compare the results for a traditional system with that of an ABC system. Which do you think is more accurate? Complete this question by entering your answers in the tabs below. Required 2 Materials Handling Quality Control Machine Maintenance Total Overhead Assigned Required 3 $ Cost Assigned to Quantity or Amount Consumed Quantity or Amount Consumed Pool by Basic by Luxury 20 moves 250 inspections 50 moves 125 inspections 5,000 machine hours 5,000 machine hours Required 4 0 Determine the amount of overhead Hazelnut will assign to the luxury line if it uses an ABC system. Luxury Model Required 5 < Required 3 $ 14,000 $ 37,500 $ 120,000 Required 5 >
Transcribed Image Text:Hazelnut Corporation manufactures lawn ornaments. It currently has two product lines, the basic and the luxury. Hazelnut has a total of $171,500 in overhead. The company has identified the following information about its overhead activity pools and the two product lines: Activity Pools Materials handling Quality control Machine maintenance 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. 2. Calculate the activity rates for each activity pool in Hazelnut's ABC system. Required 1 Cost Driver Number of moves Number of inspections Number of machine hours 3. Calculate the amount of overhead that Hazelnut will assign to the basic line if it uses an ABC system. 4. Determine the amount of overhead Hazelnut will assign to the luxury line if it uses an ABC system. 5. Compare the results for a traditional system with that of an ABC system. Which do you think is more accurate? Complete this question by entering your answers in the tabs below. Required 2 Materials Handling Quality Control Machine Maintenance Total Overhead Assigned Required 3 $ Cost Assigned to Quantity or Amount Consumed Quantity or Amount Consumed Pool by Basic by Luxury 20 moves 250 inspections 50 moves 125 inspections 5,000 machine hours 5,000 machine hours Required 4 0 Determine the amount of overhead Hazelnut will assign to the luxury line if it uses an ABC system. Luxury Model Required 5 < Required 3 $ 14,000 $ 37,500 $ 120,000 Required 5 >
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