Wake Coffee Co. manufactures two products, Standard Coffee and Deluxe Coffee. Th

Question

Wake Coffee Co. manufactures two products, Standard Coffee and Deluxe Coffee. The
company estimates total factory overhead of $60,000 for the year, which has been
divided into: Assembly, $20,000; Inspection, $28,000; and Engineering Design, $12,000.
Use activity-based costing and the usage quantities below to determine how much
overhead should be assigned to each product. Also, determine the amount of factory
overhead allocated to each product.

Assembly
(Number of machine
setups)

Inspection
(Number of
inspections)

Engineering Design
(Number of engineering
redesigns)
Standard 360 220 12
Deluxe 440 180 18
Total 800 400 30

Explanation / Answer

Determine how much
overhead should be assigned to each product. Also, determine the amount of factory
overhead allocated to each product.

Standard Deluxe Assembly 9000 11000 Inspection 15400 12600 Engineering desisgn 4800 7200 Total 29200 30800

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