TWO PARTS

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Question: TWO PARTS Bunker makes two types of briefcase, fabric and leather. The company is currently using…
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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:
    

Fabric case    17,000 labors hours, 560 material
moves, 35 setups

Leather case    11,000 labor hours, 1,040
material moves, 135 setups

Total estimated overhead costs are $249,800, of which $192,000
is assigned to the materials handling cost pool and $57,800 is
assigned to the setup cost pool.

Calculate the overhead assigned to the fabric case using the
traditional costing system based on direct labor hours. (Do
not round intermediate calculations and round your final answer to
the nearest whole dollar amount.)

Calculate the overhead assigned to the fabric case using ABC.
(Round activity rates or activity proportions, and intermediate
calculations to four decimal places.)

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

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:

Fabric case    18,000 labors hours, 660 material
moves, 63 setups

Leather case    11,000 labor hours, 990 material
moves, 117 setups

Total estimated overhead costs are $224,750, of which $198,000
is assigned to the materials handling cost pool and $36,000 is
assigned to the setup cost pool.

Calculate the overhead assigned to the leather case line using
the traditional costing system based on direct labor hours.
(Do not round intermediate calculations.)

Calculate the overhead assigned to the leather case line using
ABC.

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

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