Question

Groleau Corporation has an activity-based costing system with three activity cost pools--Processing, Setting Up, and Other. The company's overhead costs, which consist of factory utilities and indirect labor, are allocated to the cost pools in proportion to the activity cost pools' consumption of resources. Costs in the Processing cost pool are assigned to products based on machine-hours (MHs) and costs in the Setting Up cost pool are assigned to products based on the number of batches. Costs in the Other cost pool are not assigned to products. Data concerning the two products and the company's costs and activity-based costing system appear below:

Factory utilities (total)	$	34,100
Indirect labor (total)	$	10,900

Distribution of Resource Consumption Across Activity Cost Pools

	Processing	Setting Up	Other
Factory utilities	0.40	0.20	0.40
Indirect labor	0.30	0.30	0.40

	MHs	Batches
Product S8	3,300	1,300
Product F1	7,100	800
Total	10,400	2,100

	Product S8			Product F1
Sales (total)	$	66,200		$	97,800
Direct materials (total)	$	22,900		$	34,800
Direct labor (total)	$	29,600		$	43,700

Required:

a. Assign overhead costs to activity cost pools using activity-based costing.

b. Calculate activity rates for each activity cost pool using activity-based costing.

c. Determine the amount of overhead cost that would be assigned to each product using activity-based costing.

d. Determine the product margins for each product using activity-based costing.

	Activity Cost Pools Processing Setting Up Other Total Factory utilities Indirect labor Total

Activity Cost Pools	Activity Rate
Processing		per MH
Setting up		per batch

	Amount of Overhead Cost Product S8 Product F1

	Product Margin Product S8 Product F1

Answer 1