Olmo, Inc, manufactures and sells two products. Product K0 and Product H9. The a

ID: 2329238 • Letter: O

Question

Olmo, Inc, manufactures and sells two products. Product K0 and Product H9. The annual production and sales of Product of K0 is 1,200 units and of Product H9 is 1,200 unifs. The company has an activity-based costing system with the following activity cost pools, activity measures, and expected activity: Activit Estimated Expected Activity Activity Cost Pools Measures overhead Cost Product KO Product H9 Total 1,200 3,600 400 1,700 3,300 3,100 6,400 DLHs Labor-related Production orders orders Order size 550, 608 53,619 836, 216 $1,440,443 2,400 1,300 MHS The overhead applied to each unit of Product K0 under activity-based costing is closest to: (Round your intermediate calculations to 2 decimal places.) Multiple Choice $305 90 per unt $699 38 per unit $359 32 per unit $1,200.39 per unit

Explanation / Answer

Answer

Overheads

Overhead cost

Total Activity Cost drivers

Activity Rate per cost driver

No. of cost driver for K0

Amount of overhead applied

[A]

[B]

[C = A/B]

[D]

[E = C x D]

Labor Related

$ 550,608.00

3600

$ 152.95

2400

$ 367,080.00

Production order

$ 53,619.00

1700

$ 31.54

1300

$ 41,002.00

Order Size

$ 836,216.00

6400

$ 130.66

3300

$ 431,178.00

Total

$ 1,440,443.00

Total Overheads applied

$ 839,260.00

No. of units

1,200.00

ANSWER = Overhead applied to each unit of K0 = ANSWER

$ 699.38