Carlise has identified the following information about its overhead activity pools and the two product...
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Accounting
Carlise has identified the following information about its overhead activity pools and the two product lines:
Activity Pools
Cost Driver
Cost Assigned to Pool
Quantity or Amount Consumed by Indoor Line
Quantity or Amount Consumed by Outdoor Line
Materials handling
Number of moves
$ 20,090
610
moves
370
moves
Quality control
Number of inspections
$ 75,920
6,200
inspections
4,200
inspections
Machine maintenance
Number of machine hours
$ 28,700
27,000
machine hours
14,000
machine hours
Required:
Suppose Carlise used a traditional costing system with machine hours as the cost driver. Determine the amount of overhead assigned to each product line.
Calculate the activity proportions for each activity pool in Carlises ABC system.
Calculate the amount of overhead that Carlise will assign to the Indoor line if it uses an ABC system.
Determine the amount of overhead Carlise will assign to the Outdoor line if it uses an ABC system.
Compare the results for a traditional system with an ABC system. Which do you think is more accurate?
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