Hazelnut Corporation manufactures lawn ornaments. It currently has two product lines, the basic and the luxury. Hazelnut has a total of $143,484 in overhead. The company has identified the following information about its overhead activity pools and the two product lines: Quantity or Amount Consumed by Basic Activity Pools Materials handling Quality control Machine maintenance Cost Driver Number of moves Number of inspections Number of machine hours Required 1 Required 2 Complete this question by entering your answers in the tabs below. Basic Model Luxury Model 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 3 Required 4 Cost Assigned to Pool $ 4,144 $ 31,540 $ 107,800 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? Overhead Assigned Overhead Assigned Required 5 < Required 1 16 moves 240 inspections machine 5,100 hours Suppose Hazelnut used a traditional costing system with machine hours as the cost driver. Determine the amount of overhead assigned to each product line. Note: Do not round intermediate calculations and round your final answers to the nearest whole dollar amount. Required 2 > Quantity or Amount Consumed by Luxury 58 moves 120 inspections 4,700 machine hours.
Hazelnut Corporation manufactures lawn ornaments. It currently has two product lines, the basic and the luxury. Hazelnut has a total of $143,484 in overhead. The company has identified the following information about its overhead activity pools and the two product lines: Quantity or Amount Consumed by Basic Activity Pools Materials handling Quality control Machine maintenance Cost Driver Number of moves Number of inspections Number of machine hours Required 1 Required 2 Complete this question by entering your answers in the tabs below. Basic Model Luxury Model 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 3 Required 4 Cost Assigned to Pool $ 4,144 $ 31,540 $ 107,800 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? Overhead Assigned Overhead Assigned Required 5 < Required 1 16 moves 240 inspections machine 5,100 hours Suppose Hazelnut used a traditional costing system with machine hours as the cost driver. Determine the amount of overhead assigned to each product line. Note: Do not round intermediate calculations and round your final answers to the nearest whole dollar amount. Required 2 > Quantity or Amount Consumed by Luxury 58 moves 120 inspections 4,700 machine hours.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Hazelnut Corporation manufactures lawn ornaments. It currently has two product lines, the basic and the luxury. Hazelnut has a total of
$143,484 in overhead.
The company has identified the following information about its overhead activity pools and the two product lines:
Quantity or
Amount Consumed
by Basic
Activity Pools
Materials handling
Quality control
Machine maintenance
Cost Driver
Number of moves
Number of inspections
Number of machine hours
Required 1
Complete this question by entering your answers in the tabs below.
Basic Model
Luxury Model
Required 2 Required 3 Required 4
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?
Cost Assigned
to Pool
Overhead Assigned
Overhead Assigned
$ 4,144
$ 31,540
$ 107,800
Required 5
< Required 1
16 moves
240 inspections
machine
Suppose Hazelnut used a traditional costing system with machine hours as the cost driver. Determine the amount of overhead
assigned to each product line.
Note: Do not round intermediate calculations and round your final answers to the nearest whole dollar amount.
5,100 hours
Required 2 >
Quantity or Amount Consumed by Luxury
58 moves
120 inspections
4,700 machine hours
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Step 1: Introduce to predetermined overhead rate and activity rate
VIEWStep 2: 1. Working for overhead assigned to product using traditional costing method
VIEWStep 3: 2. Working for Overhead costs assigned using activity based costing
VIEWStep 4: 3 & 4 .Working for Overhead costs assigned using activity based costing
VIEWStep 5: 5. Comparision between traditional costing and ABC
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