Handal Corporation uses activity-based costing to compute product margins. Overh

Question

Handal Corporation uses activity-based costing to compute product margins. Overhead costs have already been allocated to the cost pools-Machining, Order Filling, and Other. The costs in those activity cost pools appear below Machining Order Pilling Other $12,089 $27,632 $7,400 oints 0014-15 Machining costs are assigned to products using machine-hours (Ml-is) and Order Filling costs are assigned to products using the number of orders. The costs in the Other activity cost pool are not assigned to products. Activity data appear below Orders (Order Filling) 290 1,280 MHS (Machining)P Product 04 Product S1 3,800 11,900 Finaly, sales and direct cost data are combined with Machining and Order Filling costs to determine product margins Product Product $102,100 $108,600 s 38,600 $ 39,700 04 81 Sales (total) Direct materials (total) Direct labor (total) 47,800 37,000

Explanation / Answer

Activity cost pool Activity rate Machining 0.77 =12089/(3800+11900) Order filling 17.60 =27632/(290+1280) Product S1 Machining 9163 =11900*0.77 Order filling 22528 =1280*17.6 Overhead cost 31691 Overhead cost assigned to Product S1 under activity based costing $31691

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