9. Jeanlouis, Inc., manufactures and sells two products: Product DO and Product

Question

9. Jeanlouis, Inc., manufactures and sells two products: Product DO and Product D5. The company has an activity-based costing system with the following activity cost pools, activity measures, and expected activity: Estimated Expected Activity Activity Cost Pools Activity Measures Labor-related Production orders orders General factory Overhead CostProduct DO Product D5 Total 3,300 6,900 500 800 4,200 8,500 $313,743 70,264 253,555 $637,562 3,600 300 4,300 DLHs MHs The total overhead applied to Product D5 under activity-based costing is closest to A. $319,252 B. $125,286 C. $304,920 D. $273,240 E. $318,310

Explanation / Answer

Activity cost per activity=Total overhead cost/Expected activity

Hence activity cost per :

Direct labor hours=$313743/6900=$45.47

Orders=$70264/800=$87.83

Machine hours=$253555/8500=$29.83

Hence total overhead applied=(45.47*3300)+(87.83*500)+(29.83*4200)

=$319252.

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