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 $140,760 Carlise has identified the following information about its overhead activity cost pools and the two product lines: Cost Assigned to Pool S 20,500 S 77,760 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 by Indoor Line 580 moves 6,400 inspections by Outdoor Line 420 moves 4,400 inspections 26,000 machine hours S 42,500 24,000 machine hours Required 1. Suppose Carlise 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 intermediate calculations and round your final answers to the nearest whole dollar amount.) Overhead Assigned Indoor Model Outdoor Model Total 2. Calculate the activity proportions for each cost pool in Carlise's ABC system. (Round your answers to 2 decimal places.) Activity Proportions Indoor Line Outdoor Line Materials Handling Quality Control Machine maintenance % % % per Move | per inspection l per Machine Hour

Explanation / Answer

1) Overhead rate = total overhead / total machine hours = 140760 / 50000 =2.8152

Indoor = 24000* 2.8152 = 67564.8

Outdoor = 26000*2.8152 =73195.2

2) Proportions

3) Indoor

4) OUTDOOR

5) ABC system is more accurate because it divide each overhead cost to the divisions in the ratio thay had actually used. so it gives more accurate picture

activity Total Indoor Outdoor Material handlinf 1000 58% 42% Quality ctrl 10800 59.26% 40.74% Machine maintenance 50000 48% 52%

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