Wildwind Corp. is the manufacturer of wind chimes. It currently has two product lines, the Clear Tone and the Bella. Wildwind has $61,200 in total overhead.

The company has identified the following information about its overhead activity pools and the two product lines.

Required:

1. Suppose Wildwind 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 proportions for each cost pool in Wildwind’s ABC system.

3. Calculate the amount of overhead that Wildwind will assign to the ClearTone product line if it uses an ABC system.

4. Determine the amount of overhead Wildwind will assign to the Bella product line if it uses an ABC system.

5. Compare the results for a traditional system with those of an ABC system. Which do you think is more accurate and why?

Transcribed Image Text:

Activity Pools Material handling Quality control Cost Driver Consumed Clear Tone Number of $15,300 235 moves Cost Assigned to Pool Quantity/Amount Quantity/Amount Consumed Bella 275 moves moves Number of $28,900 578 inspections 867 inspections inspections Machine Number of $17,000 maintenance machine hours 18,000 machine hours 16,000 machine hours