Kelly Company uses activity-based costing to compute product costs for external

Question

Kelly Company uses activity-based costing to compute product costs for external reports. The company has three activity cost pools and applies overhead using predetermined overhead rates for each activity cost pool. Estimated costs and activities for the current year are presented below for the three activity cost pools:

Estimated Overhead Expected Costs Activity

Activity 1 $10,152 800Activity 2 $20,394 2,200Activity 3 $34,880 1,000

Actual activity for the current year was as follows:

Actual Activity

Activity 1 805Activity 2 2,180Activity 3 1,015

Explanation / Answer

Hi,

Please find the answer as follows:

= 34880*(1015/1000) = 35403.20

Thanks.

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