Carlise Corp., which manufactures ceiling fans, currently has two product lines,

Question

Carlise Corp., which manufactures ceiling fans, currently has two product lines, the Indoor and the Outdoor. Carlise has total overhead of $129,178 Carlise has identified the following information about its overhead activity cost pools and the two product lines: Cost Assigned Quantity/Amount Consumed Quantity/Amount Consumed Activity Cost Pools Materials handling Quality control Machine maintenance Cost Driver Number of moves Number of inspections Number of machine hours to Pool 19,158 by Indoor Line 650 moves by Outdoor Line 380 moves 79,680 5,700 inspections 3,900 inspections 30,340 22,000 machine hours 19,000 machine hours

Explanation / Answer

Activity Cost Pools Cost Driver Cost Assigned to Pool Quantity/Amount Consumed by Indoor Line Quantity/Amount Consumed by Outdoor Line Total Qty of drivers Materials handling Number of moves $19,158 650 moves 380 moves            1,030 Moves Quality control Number of inspections $79,680 5,700 inspections 3,900 inspections            9,600 inspections Machine maintenance Number of machine hours $30,340 22,000 machine hours 19,000 machine hours          41,000 machine hours Traditional activity rate = Total overhead rate / Total machine hours 129178 ÷ 41000 3.150682927 per machine hour Overhead assigned 1 Indoor Model $                    69,315 MH x rate as calculated above Outdoor Model $                    59,863 MH x rate as calculated above 2 Activity proportion Indoor Line Outdoor Line materials handling 63.11% 36.89% per move Quality control 59.38% 40.63% per inspection Machine maintenance 53.66% 46.34% per machine hour Hint calculation 1st row 650/1030 = 63.11% 380/1030 = 36.89% 3 Indoor Model Hint calculation materials handling $                    12,090 19158 x 63.11% Quality control $                    47,310 79680 x 59.38% Machine maintenance $                    16,280 30340 x 53.66% Total overhead assigned $                    75,680 4 Outdoor Model materials handling $                       7,068 19158 x 36.89% Quality control $                    32,370 79680 x 40.63% Machine maintenance $                    14,060 30340 x 46.34% Total overhead assigned $                    53,498

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