Deemer Corporation has an activity-based costing system with three activity cost

Question

Deemer Corporation has an activity-based costing system with three activity cost pools--Processing, Supervising, and Other. In the first stage allocations, costs in the two overhead accounts, equipment expense and indirect labor, are allocated to the three activity cost pools based on resource consumption. Data used in the first stage allocations follow:

Distribution of Resource Consumption Across Activity Cost Pools:

Processing costs are assigned to products using machine-hours (MHs) and Supervising costs are assigned to products using the number of batches. The costs in the Other activity cost pool are not assigned to products. Activity data for the company's two products follow:

Activity:

What is the overhead cost assigned to Product X0 under activity-based costing? (Round your intermediate calculations to 2 decimal places.)

Overhead costs: Equipment expense $ 68,000 Indirect labor $ 11,300

Explanation / Answer

Solution:

Processing

Supervising

Equipment expense

20400

34000

Indirect labor

3390

4520

23790

38520

Assign overhead costs to products:

Processing: 23,790 / 19,420 = 1.23

Supervising: 38,520 / 2,120 = 18.17

The overhead cost assigned to Product X0 under activity-based costing is computed as:

Processing ( 1920 * 1.23)

2361.60

Supervising ( 1140 * 18.17)

20713.80

23075.40

Processing

Supervising

Equipment expense

20400

34000

Indirect labor

3390

4520

23790

38520

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