Required: 1. Calculate the overhead assigned to the leather case line using the traditional costing system based on direct labor hours. (Do n round intermediate calculations.) Overhead Assigned 2. Calculate the overhead assigned to the leather case line using ABC.
Required: 1. Calculate the overhead assigned to the leather case line using the traditional costing system based on direct labor hours. (Do n round intermediate calculations.) Overhead Assigned 2. Calculate the overhead assigned to the leather case line using ABC.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Required:
1. Calculate the overhead assigned to the leather case line using the traditional costing system based on direct labor hours. (Do not
round intermediate calculations.)
Overhead Assigned
2. Calculate the overhead assigned to the leather case line using ABC.
Overhead Assigned
Transcribed Image Text:Bunker makes two types of briefcase, fabric and leather. The company is currently using a traditional costing system with labor hours
as the cost driver but is considering switching to an activity-based costing system. In preparation for the possible switch, Bunker has
identified two activity cost pools: materials handling and setup. Pertinent data follow:
Number of labor hours
Number of material moves
Number of setups
Fabric Case Leather Case
18,000
12,000
765
57
935
133
Total estimated overhead costs are $243,900, of which $204,000 is assigned to the materials handling cost pool and $39,900 is
assigned to the setup cost pool.
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