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28 Sep 2019
Bunker makes two types of briefcase, fabric and leather. Thecompany is currently using a traditional costing system with laborhours as the cost driver but is considering switching to anactivity-based costing system. In preparation for the possibleswitch, Bunker has identified two activity cost pools: materialshandling and setup. Pertinent data follow:
Fabric Case Leather Case Number of laborhours 17,000 11,000 Number of materialmoves 560 1,040 Number ofsetups 35 135
Total estimated overhead costs are $249,800, of which $192,000is assigned to the materials handling cost pool and $57,800 isassigned to the setup cost pool.
Required: 1. Calculate the overhead assigned to the fabric case using thetraditional costing system based on direct labor hours. (Donot round intermediate calculations.)
Overhead assigned:
2. Calculate the overhead assigned to the fabric case usingABC.
Overhead assigned:
3. Was the fabric case over- orundercosted by the traditional cost system compared to ABC? Fabric case:
Bunker makes two types of briefcase, fabric and leather. Thecompany is currently using a traditional costing system with laborhours as the cost driver but is considering switching to anactivity-based costing system. In preparation for the possibleswitch, Bunker has identified two activity cost pools: materialshandling and setup. Pertinent data follow: |
Fabric Case | Leather Case | |||
Number of laborhours | 17,000 | 11,000 | ||
Number of materialmoves | 560 | 1,040 | ||
Number ofsetups | 35 | 135 | ||
Total estimated overhead costs are $249,800, of which $192,000is assigned to the materials handling cost pool and $57,800 isassigned to the setup cost pool. |
Required: | |
1. | Calculate the overhead assigned to the fabric case using thetraditional costing system based on direct labor hours. (Donot round intermediate calculations.) |
Overhead assigned: |
2. | Calculate the overhead assigned to the fabric case usingABC. |
Overhead assigned: | |
3. | Was the fabric case over- orundercosted by the traditional cost system compared to ABC? |
Fabric case: |
Patrina SchowalterLv2
28 Sep 2019