Managerial Accounting

Julio produces two types of calculator, standard and deluxe. The company is currently using a traditional costing system with machine hours as the cost driver but is considering a move to activity-based costing. In preparing for the possible switch, Julio has identified two cost pools: materials handling and setup. The collected data follow:

Standard Model Deluxe Model
Number of machine hours 26,500 31,500
Number of material moves 625 925
Number of setups 85 575

Total estimated overhead costs are $382,020, of which $186,000 is assigned to the material handling cost pool and $196,020 is assigned to the setup cost pool

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