Homerun Corp., which manufactures baseball bats, currently has two product lines, the Traditional and the Acrylic, and $47,125 in total overhead. The company has identified the following information about its activity cost pools and the two product lines:

Required:
1. Suppose Homerun 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 cost pool in Homerun's ABC system.
3. Calculate the amount of overhead that Homerun will assign to the Traditional line if it uses an ABC system.
4. Determine the amount of overhead Homerun will assign to the Acrylic line if it uses an ABC system.
5. Compare the results for the traditional system with those of the ABC system. Which do you think is more accurate and why?

Transcribed Image Text:

Quantity/Amount Quantity/Amount Activity Cost Assigned Consumed by Acrylic Line 75 moves Consumed by Cost Pools Materials handling Quality control Machine to Pool $17,500 5,625 $24,000 Traditional Line 100 moves 1,000 inspections 8,000 machine Cost Driver Number of moves Number of 875 inspections inspections Number of 12,000 machine hours maintenance machine hours hours