80.2K

Verified Solution

Link Copied!

$E4-12$ and $E4-13$

Bunker makes two types of briefcase, fabric and leather. The company is currently using a traditional costing system with labor hours as the cost driver but is considering switching to an activity$-$based costing system. In preparation for the possible switch, Bunker has identified two activity cost pools; materials handling and setup. Pertinent data follow:

$\backslash$table$[[,$Fabric Case,Leather Case$],[$Number of labor hours,$24,000,11,000],[$Number of material moves,$777,1,073],[$Number of setups,$66,154]]$

Total estimated overhead costs are $$293,300,$ of which $$240,500$ is assigned to the materials handling cost pool and $$52,800$ is assigned to the setup cost pool.

E$4-12($Algo$)$ Assigning Costs Using Traditional System, ABC System $[$LO $4-1,4-3,4-4,4-5,4-6]$

Required:

Calculate the overhead assigned to the fabric case using the traditional costing system based on direct labor hours.

Calculate the overhead assigned to the fabric case using ABC.

Was the fabric case over$-$ or undercosted by the traditional cost system compared to ABC?

Answer is complete but not entirely correct.

Complete this question by entering your answers in the tabs below.

Calculate the overhead assigned to the fabric case using ABC. $($Round activity rates or activity proportions and intermediate calculations to four decimal places. Round your final answer to $2$ decimal places.$)$

Overhead Assigned

$$,293,300$

Answer & Explanation Solved by verified expert

See Answer