Required information Bunker makes two types of briefcases, 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 pools: materials handling and setup. Pertinent data follow: Number of labor hours Number of material moves Number of setups Fabric Case Leather Case 12,000 8,000 483 667 28 52 Total estimated overhead costs are $135,000, of which $115,000 is assigned to the materials handling pool and $20,000 is assigned to the setup pool. equired: Calculate the overhead assigned to the fabric case using the traditional costing system based on labor hours. Calculate the overhead assigned to the fabric case using ABC. Was the fabric case over- or undercosted by the traditional cost system compared to ABC? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Calculate the overhead assigned to the fabric case using the traditional costing system based on labor hours. Note: Do not round intermediate calculations and round your final answer to the nearest whole dollar amount. verhead Assigned < Required 1 Required 2 >
Required information Bunker makes two types of briefcases, 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 pools: materials handling and setup. Pertinent data follow: Number of labor hours Number of material moves Number of setups Fabric Case Leather Case 12,000 8,000 483 667 28 52 Total estimated overhead costs are $135,000, of which $115,000 is assigned to the materials handling pool and $20,000 is assigned to the setup pool. equired: Calculate the overhead assigned to the fabric case using the traditional costing system based on labor hours. Calculate the overhead assigned to the fabric case using ABC. Was the fabric case over- or undercosted by the traditional cost system compared to ABC? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Calculate the overhead assigned to the fabric case using the traditional costing system based on labor hours. Note: Do not round intermediate calculations and round your final answer to the nearest whole dollar amount. verhead Assigned < Required 1 Required 2 >
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Variance Analysis
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Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
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Transcribed Image Text:Required information
Bunker makes two types of briefcases, 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 pools: materials handling and setup. Pertinent data follow:
Number of labor hours
Number of material moves
Number of setups.
Fabric Case Leather Case
8,000
667
52
12,000
483
28
Total estimated overhead costs are $135,000, of which $115,000 is assigned to the materials handling pool and $20,000 is
assigned to the setup pool.
Required:
1. Calculate the overhead assigned to the fabric case using the traditional costing system based on labor hours.
2. Calculate the overhead assigned to the fabric case using ABC.
3. Was the fabric case over- or undercosted by the traditional cost system compared to ABC?
Complete this question by entering your answers in the tabs below.
Required 1 Required 2 Required 3
Calculate the overhead assigned to the fabric case using the traditional costing system based on labor hours.
Note: Do not round intermediate calculations and round your final answer to the nearest whole dollar amount.
Overhead Assigned
< Required 1
Required 2 >
Transcribed Image Text:15
1. Calculate the overhead assigned to the fabric case using the traditional costing system based on labor hours.
2. Calculate the overhead assigned to the fabric case using ABC.
3. Was the fabric case over- or undercosted by the traditional cost system compared to ABC?
Complete this question by entering your answers in the tabs below.
Required 1 Required 2 Required 3
Calculate the overhead assigned to the fabric case using ABC.
Note: Round activity rates or activity proportions and intermediate calculations to four decimal places. Round your final
answer to the nearest whole dollar.
Overhead Assigned
Show Transcribed Text
< Required 1
Number of labor hours
Number of material moves
Number of setups.
Required 3 >
Required information
Bunker makes two types of briefcases, 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 pools: materials handling and setup. Pertinent data follow:
Fabric Case Leather Case
12,000
483
28
8,000
667
52
Required 1 Required 2 Required 3
3
Total estimated overhead costs are $135,000, of which $115,000 is assigned to the materials handling pool and $20,000 is
assigned to the setup pool.
Complete this question by entering your answers in the tabs below.
Required:
1. Calculate the overhead assigned to the fabric case using the traditional costing system based on labor hours.
2. Calculate the overhead assigned to the fabric case using ABC.
3. Was the fabric case over- or undercosted by the traditional cost system compared to ABC?
c
< Required 2
Was the fabric case over- or undercosted by the traditional cost system compared to ABC?
Fabric Case
Required 3 >
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VIEWStep 3: 2) The Overhead assigned Under ABC Costing is calculated as follows-
VIEWStep 4: 3) The calculation of the fabric case over or under costed is calculated as follows-
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