In manufacturing footballs, Spector Company's plant used 360 direct labor hours, 450 machine hours, and 23 setups. The following overhead costs were taken from the factory accounts: Overhead expenses: $175,000 66,000 $241,000 Machining Center Setup Center Total Volume of activities: 25,000 machine hours 100 setups 5,000 direct labor hours The plant was using a factory-wide overhead rate based on direct labor hours. A new ABC system will use machine hours in the Machining Center and number of setups in the Setup Center as cost drivers. By what amount would the amount of overhead costs assigned to footballs differ between the prior system and the ABC system? $_

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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In manufacturing footballs, Spector Company's plant used 360 direct labor hours, 450 machine hours, and
23 setups. The following overhead costs were taken from the factory accounts:
Machining Center
Setup Center
Total
Overhead expenses:
$175,000
66,000
$241,000
Volume of activities:
25,000 machine hours
100 setups
5,000 direct labor hours
The plant was using a factory-wide overhead rate based on direct labor hours. A new ABC system will
use machine hours in the Machining Center and number of setups in the Setup Center as cost drivers.
By what amount would the amount of overhead costs assigned to footballs differ between the prior
system and the ABC system? $_
Transcribed Image Text:In manufacturing footballs, Spector Company's plant used 360 direct labor hours, 450 machine hours, and 23 setups. The following overhead costs were taken from the factory accounts: Machining Center Setup Center Total Overhead expenses: $175,000 66,000 $241,000 Volume of activities: 25,000 machine hours 100 setups 5,000 direct labor hours The plant was using a factory-wide overhead rate based on direct labor hours. A new ABC system will use machine hours in the Machining Center and number of setups in the Setup Center as cost drivers. By what amount would the amount of overhead costs assigned to footballs differ between the prior system and the ABC system? $_
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