Howell Corporation\'s activity-based costing system has three activity cost pool
ID: 2538071 • Letter: H
Question
Howell Corporation's activity-based costing system has three activity cost pools--Machining, Setting Up, and Other. The company's overhead costs, which consist of equipment depreciation and indirect labor, are allocated to the cost pools in proportion to the activity cost pools' consumption of resources.
Distribution of Resource Consumption Across Activity Cost Pools
Costs in the Machining cost pool are assigned to products based on machine-hours (MHs) and costs in the Setting Up cost pool are assigned to products based on the number of batches. Costs in the Other cost pool are not assigned to products.
Additional data concerning the company's products appears below:
Required:
a. Assign overhead costs to activity cost pools using activity-based costing.
b. Calculate activity rates for each activity cost pool using activity-based costing.
c. Determine the amount of overhead cost that would be assigned to each product using activity-based costing.
d. Determine the product margins for each product using activity-based costing.
Equipment depreciation (total) $ 33,800 Indirect labor (total) $ 7,950Explanation / Answer
a( machining Setup other Equipment deprecation 10140 10,140 13520 indirect labor 2385 795 4770 total 12525 10,935 18290 b) activity overhead rate Machining (12,525/15200) 0.82 per machine hr setup (10935/3,100)= 3.53 per batch overhead assinged c) product S4 7334 4586 11919 product C0 5191 6349 11541 total 12525 10935 23460 d) product margins product s4 product CO sales 88,100 75,500 less Direct materials 27,600 24,900 direct labor 41,100 33,800 overhead 11919 11541 total cost 80,619 70,241 product margins 7,481 5,259
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