Brisky Corporation uses activity-based costing to compute product margins. In th

Question

Brisky 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 expense $12,300 Distribution of Resource Consumption Across Activity Cost Pools: Activity Cost Pools Machining Order Filling Other Equipment depreciation 0.60 0.30 0.10 Supervisory expense 0.60 0.20 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. Activity: MHs (Machining) Orders (Order Filling) Product I3 6,050 198 Product U8 21,800 999 Total 27,850 1,197 Finally, sales and direct cost data are combined with Machining and Order Filling costs to determine product margins. Sales and Direct Cost Data: Product I3 Product U8 Sales (total) $73,000 $69,800 Direct materials (total) $30,800 $18,500 Direct labor (total) $16,600 $30,600 What is the overhead cost assigned to Product I3 under activity-based costing? (Round your intermediate calculations to 2 decimal places and your final answer to nearest whole dollar.)

Explanation / Answer

Overhead cost for Product I3 is $18387.

Cost Pool Overhead Cost Machining Order Filling Other-based on resource consumption Equipment depreciation(6:3:1) $91,000 $54,600 $27,300 $9,100 Supervisory expense(6:2:2) $12,300 $7,380 $2,460 $2,460 Total $103,300 $61,980 $29,760 $11,560 2nd Stage Overhead Cost Product I3 Product U8 Machining(6050:21800) $61,980 $13,464 $48,516 Order Filling(198:999) $29,760 $4,923 $24,837 Total $91,740 $18,387 $73,353

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