Betterton Corporation uses an activity based costing system to assign overhead c

Question

Betterton Corporation uses an activity based costing system to assign overhead costs to products. In the first stage, two overhead c cost pools-Machining, Order Filling, and Other-based on resource consumption. Data to perform these allocations appear below: t depreciation and supervisory expense-are allocated to three activity Overhead costs: Equipment depreciation Supervisory expense $ 65,000 S 7,850 Distribution of Resource Consumption Across Actlvity Cost Pools Activity Cost Pools Equipment depreciation Supervisory expense Machining Order Filling Other 0.20 0.50 0.50 0.10 0.30 040 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. Activity data for the company's two products followw Activity Orders (Order FIlling) 1,600 4,800 6,400 MHs Product AB Product K2 Total 4,100 22,500 26,600 What is the overhead cost assigned to Product A8 under activity-based costing? (Round intermediate calculations to two decimal places.) $5,125 O $5,664 O $36,425 O $10,789

Explanation / Answer

The answer is $ 10,789 .

The Explanation is as follows:

Machining Order Filing Other Depreciation 32500 19500 13000 (65000 in 0.5:0.3:0.2) Supervisor expense 785 3140 3925 (7850 in 0.1:0.4:0.5) Total overheads 33285 22640 16925 Total Activity during the year Machine Hours 26600 Number of orders 6400 Cost per activity pool $ 1.25 per MH $ 3.5375 per order Overheads of Product AB Machining (4100 MH @ 1.25 ) 5125 Order Filling (1600 orders@ 3.5375) 5660 10785 Approx

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