Doede Corporation uses activity-based costing to compute product margins. In the

Question

Doede Corporation uses activity-based costing to compute product margins. In the first stage, the activity-based costing system allocates two overhead accounts--equipment depreciation and supervisory expense-to three activity cost pools--Machining, Order Filling, and Other-based on resource consumption. Data to perform these allocations appear below: Overhead costs: Equipment depreciation $91,000 Supervisory expense12,300 Distribution of Resource Consumption Across Activity Cost Pools Activity Cost Pools Machining Order Filling Equipment depreciation Supervisory expense 0.60 0.60 0.30 0.20 Other 0.10 0.20 In the second stage, Machining costs are assigned to products using machine-hours (MHs) and Order Filling costs are assigned to products using the number of orders. The costs in the Other activity cost pool are not assigned to products.

Explanation / Answer

First stage allocation :

Calculate total overhead cost assigned to Product W1 :

so answer is a) $18414

Machining Order filling Other Equipment depreciation 54600 27300 9100 Supervisor's salary 7380 2460 2460 Total 61980 29760 11560

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