HulaHug Corp., which manufactures hula hoops, currently has two product lines, the Roundabout and the Sassafras. Hula Hug has total overhead of $131.200, Hula Hug has identified the following information about its overhead activity pools and the two product lines.

Required:
1. Suppose Hula Hug 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 Hula Hug's ABC system.
3. Calculate the amount of overhead that Hula Hug will assign to the Roundabout line if it uses an ABC system.
4. Determine the amount of overhead Hula Hug will assign to the Sassafras line if it uses an ABC system.
5. Compare the results for a traditional system with an ABC system. Which do you think is more accurate and why?

Transcribed Image Text:

QuantitylAmount QuantitylAmount AssignedConsumed Roundabout Consumed Line Activity Pools Cost Driver to Pool Sassafras Line Material Number of $19,650 575 moves 425 moves handling moves Quality control Number of $78,750 6,000 inspections4,500 inspections $32,800 21,000 machine 20,000 machine RAex:inin Number of maintenance machine hours hours hours