Hazelnut Corporation manufactures lawn ornaments. It currently has two product lines, the basic and the luxury. Hazelnut has a total of $180,692 in overhead. The company has identified the following information about its overhead activity pools and the two product lines: Activity Pools Materials handling Quality control Machine maintenance Cost Driver Cost Assigned to Pool Number of moves Number of inspections Number of machine hours $ 3,792 $ 28,500 $ 148,400 Quantity or Amount Consumed by Basic 28 moves 200 inspections 5,400 machine hours Quantity or Amount Consumed by Luxury 51 moves 100 inspections 5,200 machine hours Required: 1. Suppose Hazelnut 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 rates for each activity pool in Hazelnut's ABC system. 3. Calculate the amount of overhead that Hazelnut will assign to the basic line if it uses an ABC system. 4. Determine the amount of overhead Hazelnut will assign to the luxury line if it uses an ABC system. 5. Compare the results for a traditional system with that of an ABC system. Which do you think is more accurate? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Required 5 Suppose Hazelnut used a traditional costing system with machine hours as the cost driver. Determine the amount of overhead assigned to each product line. Note: Do not round intermediate calculations and round your final answers to the nearest whole dollar amount. Basic Model Luxury Model Overhead Assigned Overhead Assigned < Required 1 Required 2 >
Hazelnut Corporation manufactures lawn ornaments. It currently has two product lines, the basic and the luxury. Hazelnut has a total of $180,692 in overhead. The company has identified the following information about its overhead activity pools and the two product lines: Activity Pools Materials handling Quality control Machine maintenance Cost Driver Cost Assigned to Pool Number of moves Number of inspections Number of machine hours $ 3,792 $ 28,500 $ 148,400 Quantity or Amount Consumed by Basic 28 moves 200 inspections 5,400 machine hours Quantity or Amount Consumed by Luxury 51 moves 100 inspections 5,200 machine hours Required: 1. Suppose Hazelnut 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 rates for each activity pool in Hazelnut's ABC system. 3. Calculate the amount of overhead that Hazelnut will assign to the basic line if it uses an ABC system. 4. Determine the amount of overhead Hazelnut will assign to the luxury line if it uses an ABC system. 5. Compare the results for a traditional system with that of an ABC system. Which do you think is more accurate? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Required 5 Suppose Hazelnut used a traditional costing system with machine hours as the cost driver. Determine the amount of overhead assigned to each product line. Note: Do not round intermediate calculations and round your final answers to the nearest whole dollar amount. Basic Model Luxury Model Overhead Assigned Overhead Assigned < Required 1 Required 2 >
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Transcribed Image Text:Hazelnut Corporation manufactures lawn ornaments. It currently has two product lines, the basic and the luxury. Hazelnut has a total of
$180,692 in overhead.
The company has identified the following information about its overhead activity pools and the two product lines:
Activity Pools
Materials handling
Quality control
Machine maintenance
Cost Driver
Cost Assigned
to Pool
Number of moves
Number of inspections
Number of machine hours
$ 3,792
$ 28,500
$ 148,400
Quantity or Amount
Consumed by Basic
28 moves
200 inspections
5,400 machine hours
Quantity or Amount
Consumed by Luxury
51 moves
100 inspections
5,200 machine hours
Required:
1. Suppose Hazelnut 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 rates for each activity pool in Hazelnut's ABC system.
3. Calculate the amount of overhead that Hazelnut will assign to the basic line if it uses an ABC system.
4. Determine the amount of overhead Hazelnut will assign to the luxury line if it uses an ABC system.
5. Compare the results for a traditional system with that of an ABC system. Which do you think is more accurate?
Complete this question by entering your answers in the tabs below.
Required 1 Required 2 Required 3 Required 4
Required 5
Suppose Hazelnut used a traditional costing system with machine hours as the cost driver. Determine the amount of overhead
assigned to each product line.
Note: Do not round intermediate calculations and round your final answers to the nearest whole dollar amount.
Basic Model
Luxury Model
Overhead Assigned
Overhead Assigned
< Required 1
Required 2 >
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