Reck Corporation uses activity-based costing to assign overhead costs to product
ID: 2579599 • Letter: R
Question
Reck Corporation uses activity-based costing to assign overhead costs to products. Overhead costs have already been allocated to the company's three activity cost pools as follows: Machining, $11,700; Order Filling, $17,800; and Other, $13,500. 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 appear below: Orders (Order (Machining) Filling) MHs Product P7 Product V8 6,900 200 3,100 800 What is the overhead cost assigned to Product V8 under activity-based costing? Multiple Choice $14,240Explanation / Answer
Overhead cost assigned to V8 under ABC 17,867.00 Statement showing computations Particulars Amount a Activity Driver No of Activity b Cost per activity c= a/b No of Activity of P8 d Cost Allocated to P8 c*d No of Activity of V8 e Cost Allocated to V8 c*e Machining 11,700.00 Machine hours 10,000.00 1.17 6,900.00 8,073.00 3,100.00 3,627.00 Order filling 17,800.00 Orders 1,000.00 17.80 200.00 3,560.00 800.00 14,240.00 Total Overhead 29,500.00 11,633.00 17,867.00
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