Matson Company manufactures automobile floor mats. It currently has 2 product lines, the Standard and the Deluxe. Suppose that Matson has conducted further research into its overhead and potential cost drivers. As a result, the company has compiled the following detailed information breaking total overhead into three cost pools

Matson Company manufactures automobile floor mats. It currently has 2 product lines, the Standard and the Deluxe. Suppose that Matson has conducted further research into its overhead and potential cost drivers. As a result, the company has compiled the following detailed information breaking total overhead into three cost pools

 

Activity Pools	Cost Driver	Cost Assigned to Pool				Quantity/Amount Consumed by Standard Floor Mat Line	Quantity/Amount Consumed by Deluxe Floor Mat Line
Material Handling	# moves		$	2,376		46 moves	62 moves
Quality Control	# inspections		$	9,100		700 inspections	700 inspections
Machine Maintenance	# machine hrs		$	14,240		2,990 machine hours	4,130 machine hours
Requirement 1:
Calculate the activity rates for each cost pool assuming Matson uses an ABC system. (Round your answers to 2 decimal places. Omit the "$" sign in your response.)

 

	Activity rate
Material Handling	$ 22	per material move
Quality Control	$ 6.5	per inspection
Maintenance	$ 2	per machine hour
Explanation: Material Handling:  $2,376 / 108 = $22/move Quality Control: $9,100 / 1,400 = $6.5/inspection Maintenance:  $14,240 / 7,120 = $2/machine hr. Requirement 2:
Calculate the amount of overhead that Matson will assign to the standard floor mat line. (Round your intermediate calculations to 2 decimal places and final answers to the nearest whole dollar amount. Omit the "$" sign in your response.)

 

Total overhead assigned

$ 11,542

 Explanation:

	Activity Rate	Activity Requirement (Standard Mat)	Total Cost Assigned
Materials Hand	$22 per move	46 moves		$	1,012
Quality Control	$6.5 per inspection	700 inspections			4,550
Machine Maintenance	$2 per machine hour	2,990 machine hours			5,980
Total Cost Assigned				$	11,542

Requirement 3:

Determine the amount of overhead Matson will assign to the deluxe product line. (Round your intermediate calculations to 2 decimal places and final answers to the nearest whole dollar amount. Omit the "$" sign in your response.)

 

Total overhead assigned

$ 14,174

Explanation:

	Activity Rate	Activity Requirement (Deluxe Mat)	Total Cost Assigned
Materials Hand	$22 per move	62 moves		$	1,364
Quality Control	$6.5 per inspection	700 inspections			4,550
Machine Maintenance	$2 per machine hour	4,130 machine hours			8,260
Total Cost Assigned				$	14,174

Matson Company manufactures automobile floor mats. It currently has 2 product lines, the Standard and the Deluxe.

Matson Company manufactures automobile floor mats. It currently has 2 product lines, the Standard and the Deluxe.

Matson has a total of $25,640 in overhead. It currently used a traditional cost system with overhead applied to the product on the basis of either direct labor (DL) hours or machine hours. Matson has compiled the following information about possible cost drivers and its two product lines.

 

Matson Company Total	Quantity/Amount Consumed by Standard Floor Mat Line	Quantity/Amount Consumed by Deluxe Floor Mat Line
1,010 DL hours	570 DL hours	440 DL hours
6,980 machine hours	2,950 machine hours	4,030 machine hours

 

Requirement 1:

Suppose Matson used a traditional costing system with direct labor hours as the cost driver. Determine the amount of overhead assigned to each product line. (Round activity rates and final answers to 2 decimal places. Omit the "$" sign in your response.)

 

	Overhead assigned
Standard Floor Mat	$ 14,470.10
Deluxe Floor Mat	$ 11,169.90

 

Requirement 2:

Suppose Matson used a traditional costing system with machine hours as the cost driver. Determine the amount of overhead assigned to each product line. (Round activity rates to 4 decimal places and final answers to 2 decimal places. Omit the "$" sign in your response.)

 

	Overhead assigned
Standard Floor Mat	$ 10,836.39
Deluxe Floor Mat	$ 14,803.61

Explanation:

1:

$25,640 / 1,010 labor hrs = $25.39/LH

Standard Floor Mat:  570 × $25.39 = $14,472.30

Deluxe Floor Mat:     440 × $25.39 = $11,171.60

2:

$25,640 / 6,980 machine hrs = $3.6734/MH

Standard Floor Mat:  2,950 × $3.6734 = $10,836.53

Deluxe Floor Mat:  4,030 × $3.6734 = $14,803.80