Amount of overhead costs assigned to the standard model

Reference no: EM132949248

Question

Q. 1 Barnes Corporation manufactures two models of office chairs, a standard and a deluxe model. The following activity and cost information has been compiled:

Number of Product Set-ups Standard 22 Deluxe 28
Overhead costs $30 000

Required:
Number of Components 8 12
$60 000
Number of Direct Labour Hours 500 300

a) Assume a traditional costing system applies the $90 000 of overhead costs based on direct labour hours. What is the total amount of overhead costs assigned to the standard model?

b) Assume a traditional costing system applies the $90 000 of overhead costs based on direct labour hours. What is the total amount of overhead costs assigned to the deluxe model?

Number of set-ups and number of components are identified as activity-cost drivers for overheads.

c) Assuming an activity-based costing system is used, what is the total amount of overhead costs assigned to the standard model?

d) Assuming an activity-based costing system is used, what is the total amount of overhead costs assigned to the deluxe model?

e) Comment on your findings from a) to d)

Reference no: EM132949248

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