Wedd Corporation uses activity-based costing to assign overhead costs to product

Question

Wedd 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: Processing.$27,200; Supervising. $9,300 and Other, $9,500. 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 actvity cost pool are not assigned to products. Activity data appear below s Batches 01:3931 (Processing) (Supervising) Product 06 Product D7 Total 9,200 500 10,800 20,000 1,500 2,000 What is the overhead cost assigned to Product 06 under activity-based costing? Multiple Choice $2.325 $23,000 $14,837 Prox 1625 Next >

Explanation / Answer

SOLUTION

Cost assigned to product O6 = $14,837

Processing = $27,200 / 20,000 = $1.36 per MH

Supervising = $9,300 / 2,000 = $4.65 per batch

Cost assigned to product O6 = ($1.36 * 9,200) + ($4.65 * 500)

= $12,512 + $2,325 = $14,837

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