Question

Julio produces two types of calculator, standard and deluxe. The company is currently using a traditional costing system with machine hours as the cost driver but is considering a move to activity-based costing. In preparing for the possible switch, Julio has identified two cost pools: materials handling and setup. The collected data follow:


Total estimated overhead costs are $303,560, of which $140,000 is assigned to the material handling cost pool and $163,560 is assigned to the setup cost pool.

Required:
1. Calculate the overhead assigned to each product using the traditional cost system. Round the overhead rate to four decimal places if necessary.
2. Calculate the overhead assigned to each product using ABC. Round activity rates to four decimal places ifnecessary.


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  • CreatedFebruary 27, 2015
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