PA4-1 (Algo) Assigning Costs Using Traditional System, ABC System [LO 4-1, 4-3, 4-4, 4-6] Hazelnut Corporation manufactures lawn ornaments. It currently has two product lines, the basic and the luxury. Hazelnut has a total of $143,532 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. Required 2 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. Cost Assigned to Pool $ 3,312 $ 29,820 $ 110,400 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? Required 3 Required 4 Required 5 14 moves. 220 inspections machine 5,400 hours < Prev Quantity or Amount Consumed by Luxury 55 moves 110 inspections 3,800 machine hours Compare the results for a traditional system with that of an ABC system. Which do you think is more accurate? Which do you think is more accurate? 3 of 3 # Next
PA4-1 (Algo) Assigning Costs Using Traditional System, ABC System [LO 4-1, 4-3, 4-4, 4-6] Hazelnut Corporation manufactures lawn ornaments. It currently has two product lines, the basic and the luxury. Hazelnut has a total of $143,532 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. Required 2 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. Cost Assigned to Pool $ 3,312 $ 29,820 $ 110,400 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? Required 3 Required 4 Required 5 14 moves. 220 inspections machine 5,400 hours < Prev Quantity or Amount Consumed by Luxury 55 moves 110 inspections 3,800 machine hours Compare the results for a traditional system with that of an ABC system. Which do you think is more accurate? Which do you think is more accurate? 3 of 3 # Next
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Concept explainers
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.
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![PA4-1 (Algo) Assigning Costs Using Traditional System, ABC System [LO 4-1, 4-3, 4-4, 4-6]
Hazelnut Corporation manufactures lawn ornaments. It currently has two product lines, the basic and the luxury. Hazelnut has a total of
$143,532 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.
Required 2
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.
Cost Assigned
to Pool
$ 3,312
$ 29,820
$ 110,400
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?
Required 3
Required 4
Required 5
< Prev
14 moves
220 inspections
machine
5,400 hours
3 of 3
Compare the results for a traditional system with that of an ABC system. Which do you think is more accurate?
Which do you think is more accurate?
Quantity or Amount Consumed by Luxury
55 moves
110 inspections
3,800 machine hours.
#
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Transcribed Image Text:PA4-1 (Algo) Assigning Costs Using Traditional System, ABC System [LO 4-1, 4-3, 4-4, 4-6]
Hazelnut Corporation manufactures lawn ornaments. It currently has two product lines, the basic and the luxury. Hazelnut has a total of
$143,532 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.
Required 2
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.
Cost Assigned
to Pool
$ 3,312
$ 29,820
$ 110,400
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?
Required 3
Required 4
Required 5
< Prev
14 moves
220 inspections
machine
5,400 hours
3 of 3
Compare the results for a traditional system with that of an ABC system. Which do you think is more accurate?
Which do you think is more accurate?
Quantity or Amount Consumed by Luxury
55 moves
110 inspections
3,800 machine hours.
#
Next >
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