Bunker makes two types of briefcases, fabric and leather. The company is currently using a traditional...
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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 16,000 820 91 9,000 1,230 169 Total estimated overhead costs are $385,500, of which $307,500 is assigned to the materials handling pool and $78,000 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. S 3. Was the fabric case over- or undercosted by the traditional cost system compared to ABC? 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 16,000 820 91 9,000 1,230 169 Total estimated overhead costs are $385,500, of which $307,500 is assigned to the materials handling pool and $78,000 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. S 3. Was the fabric case over- or undercosted by the traditional cost system compared to ABC?
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Related Book For
Managerial Accounting
ISBN: 978-0078025518
2nd edition
Authors: Stacey Whitecotton, Robert Libby, Fred Phillips
Posted Date:
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