Reference no: EM132516253

Hazelnut Corp. manufactures lawn ornaments. It currently has two product lines, the basic and the luxury. Hazelnut has a total of $169,040 in overhead.

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

Activity Cost PoolsCost DriverCost Assigned

to PoolQuantity/Amount Consumed by

BasicQuantity/Amount Consumed by

Luxury Materials handling

Number of moves $3,920 19 moves 61 moves

Quality control

Number of inspections $33,820 220 inspections110 inspections

Machine maintenance

Number of machine hours $131,300 5,400 machine hours4,700 machine hours

Required:

Question 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. (Do not round intermediate calculations and round your final answers to the nearest whole dollar amount.)

Question 2. Calculate the activity rates for each cost pool in Hazelnut's ABC system.(Round your answers to the nearest whole dollar.)

Question 3. Calculate the amount of overhead that Hazelnut will assign to the basic line if it uses an ABC system.(Round your intermediate and final answers to the nearest whole dollar.)

Question 4. Determine the amount of overhead Hazelnut will assign to the luxury line if it uses an ABC system.(Round your intermediate and final answers to the nearest whole dollar.)

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