Sabroso Chocoloate Company has two activities. The cost of setting up equipment

Question

Sabroso Chocoloate Company has two activities. The cost of setting up equipment is driven by setup hours; baking costs are driven by oven hours.

The company produces two products: Fudge and Cookies, which have the following information.

Using Activity-Based Costing, what is the total overhead assigned to Cookies?

Fudge    Cookies Activity Rates Direct Materials & Direct Labor    $489,703 $535,666 Units Produced 8,447 21,407 Setup hours 4,048 1,258 $ 53 Oven hours 641 4,059 $ 149 Plantwide Activity Rate $ 190

Explanation / Answer

Total Overhead Assigned :

Hence the correct answer is $ 671,465

Cookies       Activity Activity Rates Cost( Activity * Activity Rate) Setup hours 1,258 53 66,674 Oven hours 4,059 149 604,791 Total Overhead Assigned 671,465

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