1.
Hazelnut Corp. manufactures lawn ornaments. It currently has two product lines, the basic and
the luxury. Hazelnut has a total of $141,509 in overhead.
The company has identified the following information about its overhead activity cost pools and
the two product lines:
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 your
intermediate calculations.)
Calculate the activity rates for each cost pool in Hazelnut
Hazelnut Corp. manufactures lawn ornaments. It currently has two product lines, the basic and
the luxury. Hazelnut has a total of $141,509 in overhead.
The company has identified the following information about its overhead activity cost pools and
the two product lines:
Solution
Pool OF costs Cost Assigned to Pool Cost distribution based on Ratio of Machine Hours as cost
driver Ratio 4800 5300 10100 Materials handling 3264/10100*4800 3264/10100*4800 3264.00
1551.21 1712.79 $3264.00 Quality control 27145/10100*4800 27145/10100*5300 27145.00
12900.59 14244.41 $27145.00 Machine maintenance 111100/10100*4800 111100/10100*5300
111100.00 52800.00 58300.00 $111100.00 Pool OF costs Cost Assigned to Pool ABC System
Quantity/Amount Consumed by Basic Quantity/Amount Consumed by Luxury Activity Rate in $
Materials handling 3264.00 13 55 68 3264/68 Activity Rate 48.00 Quality control 27145.00 190
115 305 27145/305 Activity Rate 89.00 Machine maintenance 111100.00 4800 5300 10100
111100/10100 Activity Rate 11.00 Pool OF costs Cost Assigned to Pool ABC System
Quantity/Amount Consumed by Basic Activity Rate as calculated earlier Cost Assigned to Basic
as ABC in $ Materials handling 3264.00 13.00 48.00 624.00 Quality control 27145.00 190.00
89.00 16910.00 Machine maintenance 111100.00 4800.00 11.00 52800.00 Pool OF costs Cost
Assigned to Pool ABC System Quantity/Amount Consumed by Luxury Activity Rate as
calculated earlier Cost Assigned to Basic as ABC in $ Materials handling 3264.00 55.00 48.00
2640.00 Quality control 27145.00 115.00 89.00 10235.00 Machine maintenance 111100.00
5300.00 11.00 58300.00