FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Station 9 ¾ Corporation manufacturers railroad tracks. They are currently using a traditional system, with machine hours as the cost driver. They are considering converting to an ABC system, and want a comparison of the two. Station 9 ¾ has identified the following activity information: 

Activity Cost Driver Est. Cost Driver Volume Est. Cost Pool
Machining Machine Hours 12,000 $119,000
Assembly Direct Labor Hours 15,800 $107,000
Setup Number of Setups 9 $24,300
Total     $250,300

The actual cost driver volume that occurred during the production process is below: 

Machine Hours  8,600
Direct Labor Hours 9,700
Number of Setups 7

 

What is the Difference between traditional and ABC system?

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