Required information Bunker makes two types of briefcase, fabric and leather. The company is currently using a traditior with labor hours as the cost driver but is considering switching to an activity-based costing system the possible switch, Bunker has identified two activity cost pools: materials handling and setup. Pe Fabric Case Leather Case Number of labor hours 14,000 504 6,000 696 Number of material moves Number of setups 27 63
Required information Bunker makes two types of briefcase, fabric and leather. The company is currently using a traditior with labor hours as the cost driver but is considering switching to an activity-based costing system the possible switch, Bunker has identified two activity cost pools: materials handling and setup. Pe Fabric Case Leather Case Number of labor hours 14,000 504 6,000 696 Number of material moves Number of setups 27 63
Principles of Cost Accounting
17th Edition
ISBN:9781305087408
Author:Edward J. Vanderbeck, Maria R. Mitchell
Publisher:Edward J. Vanderbeck, Maria R. Mitchell
Chapter2: Accounting For Materials
Section: Chapter Questions
Problem 15E: Kenkel, Ltd. uses backflush costing to account for its manufacturing costs. The trigger points are...
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Please help, I don't understand how to calcualte the traiditional costing system.
Please answer the 3 questions.
Transcribed Image Text:Required information
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
Leather Case
Number of labor hours
14,000
6,000
Number of material moves
Number of setups
504
696
27
63
Total estimated overhead costs are $143,400, of which $120,000 is assigned to the materials handling cost pool and
$23,400 is assigned to the setup cost pol.
Required:
1. Calculate the overhead assigned to the fabric case using the traditional costing system based on direct labor hours.
2. Calculate the overhead assigned to the fabric case using ABC.
3. Was the fabric case over- or undercosted by the traditional cost system compared to ABC?
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