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Sagot :
Answer:
1. 79,600
2. 151,200
3.The leather case line is undercosted by the traditional cost system compared to ABC
Explanation:
1. Calculation for the overhead assigned to the leather case line using the traditional costing system based on direct labor hours
Overhead Assigned to leather case =[$238,800/(16,000+8,000)*8,000]
Overhead Assigned to leather case =[$238,800/24,000*8,000]
Overhead Assigned to leather case =79,600
Therefore the overhead assigned to the leather case line using the traditional costing system based on direct labor hours will be 79,600
2. Calculation for the overhead assigned to the leather case line using ABC
First step is to calculate the Material handling rate
Material handling rate = 186,000/(620+ 930)
Material handling rate = 186,000/1,550
Material handling rate = 120 per move
Second step is to calculate the Setup cost
Setup cost =$52,800/(40+ 120)
Setup cost =$52,800/160
Setup cost = 330 per setup
Now let calculate overhead assigned to the leather case line using ABC
Overhead assigned to leather case ABC = (930*120)+(120*330)
Overhead assigned to leather case ABC =111,600+39,600
Overhead assigned to leather case ABC = 151,200
Therefore the overhead assigned to the leather case line using ABC will be 151,200
3. Based on the above calculation the leather case line is undercosted by the traditional cost system compared to ABC
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