Schell Company manufactures automobile floor mats. It currently has two product lines, the Standard and the Deluxe. Suppose that Schell 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 Cost Pools Cost Driver Cost Assigned to Pool Quantity/Amount Consumed by Standard Floor Mat Line Quantity/Amount Consumed by Deluxe Floor Mat LineMaterial handling Number of moves $3,750 30 moves 70 movesQuality control Number of inspections $13,860 400 inspections 600 inspectionsMachine maintenance Number of machine hours $21,450 4,150 machine hours 3,000 machine hoursRequired:1. Calculate the activity rates for each cost pool assuming Schell uses an ABC system.Activity RateMaterial Handling ___ per Material MoveQuality Control _ per InspectionMaintenance ___ per Machine Hour2. Calculate the amount of overhead that Schell will assign to the Standard floor mat line.3. Determine the amount of overhead Schell will assign to the Deluxe product line.

Material Handling = Cost Assigned to Pool/ (Quantity/Amount Consumed by Standard Floor Mat Line / Quantity/Amount Consumed by Deluxe Floor Mat Line)

= 3,750/( 30 +70)

= $37.50 material move

Quality Control = 13,860/ ( 400 + 600)

= $13.86 per inspection

Maintenance = 21,450/ (4,150 + 3,000)

= $3 per machine hour

2. Calculate the amount of overhead that Schell will assign to the Standard floor mat line.

= Material handling + Quality Control + Maintenance

= (37.5 * 30) + (13.86 * 400) + (3 * 4,150)

= $‭19,119‬

3. Determine the amount of overhead Schell will assign to the Deluxe product line.

= Material handling + Quality Control + Maintenance

= (37.5 * 70) + (13.86 * 600) + (3 * 3,000)

= $‭19,941‬

suchetasVT suchetasVT · Answer 2 · 2022-03-24T10:14:49+01:00

The activity rate is the ratio between the number of active people (employed and unemployed) and the total number of people involved, this is calculated as one of the significant part of Activity-based Costing.

What is ABC Costing?

Activity-based (ABC) is a cost-effective method that identifies activities in an organization and provides the cost per job for all products and services depending on the actual use of each.

This model, therefore, offers an overhead cost over direct costs compared to normal costs.

Calculation of activity rates as per the given information:

[tex]\rm\, Material \;Handling:\\\\=\frac{Cost \; Assigned \; to \; Pool}{(\;(Quantity/ \;Amount Consumed \;by \;Standard \; Floor \; Mat \; Line \; or\,Deluxe \;Floor \; Mat \; Line)}[/tex]

Material Handling:

[tex]\rm\,Activity \;Rate = 3,750/( 30 +70)\rm\,Activity\;Rate = \$37.50 material move[/tex]

Quality Control:

[tex]\rm\,Activity \;Rate = 13,860/(400 + 600)\\\\\rm\,Activity\;Rate = \$13.86 \;per \;inspection[/tex]

Maintenance:

[tex]\rm\,Activity \;Rate = 21,450/(4,150 + 3,000)\\\\ \rm\,Activity\;Rate = \$3 \; per \; machine \; hour[/tex]

2. Calculation of the amount of overhead that Schell will assign to the standard floor mat line:

[tex]\rm\,Overhead \; Costs = Material \;handling + Quality \; Control + Maintenance\\\\= (37.5 \times 30) + (13.86 \times 400) + (3\times 4,150)\\\\= \$19,119[/tex]

3. Calculation of the amount of overhead that Schell will assign to the Deluxe Product line:

[tex]\rm\,Overhead \; Costs = Material \;handling + Quality \; Control + Maintenance\\\\\\\rm\,Overhead \; Costs = (37.5 \times 70) + (13.86 \times 600) + (3\times 3,000)\\\\\\\rm\,Overhead \; Costs = \$19.941[/tex]

Hence, the Activity rates of costs assigned as calculated assuming the firm follows ABC Costing analysis and the total overhead costs under standard floor mat line and Deluxe Product line are $19,119 and $19,941.

To learn more about Activity-based Costing analysis, refer to the link:

https://brainly.com/question/24866064