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 Overhead costs: Equipment expense Indirect labor $132,000 $ 13,700 Distribution of Resource Consumption Across Activity Cost Pools Activity Cost Pools Other 0.30 0.30 Processing Supervising Equipment expense Indirect labor 0.30 0.30 0.40 0.40 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: MHB Batches (Processing) (Supervising) Product F6 Product xo Total 16,800 1,660 18,460 970 1,080 2,050

Explanation / Answer

Answer d. $28.43 per batch Activity Cost Pools Processing Supervising Other Equipment Expense      39,600.00      52,800.00      39,600.00 Indirect Labor        4,110.00        5,480.00        4,110.00 Total      43,710.00      58,280.00      43,710.00 Activity Rate - Supervising = $58,280 (Estimated Overhead) / 2,050 Batches (Activity Base) Activity Rate - Supervising = $28.43 per batch (Approx.)

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