Wedd Corporation uses activity-based costing to assign overhead costs to products. Overhead costs have already been...

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, $46,700; Supervising, $33,600; and Other, $24,200. 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 activity cost pool are not assigned to products. Activity data appear below:

	MHs (Processing)	Batches (Supervising)
Product O6	18,400	1,250
Product D7	770	970
Total	19,170	2,220

What is the overhead cost assigned to Product O6 under activity-based costing? (Round your intermediate calculations to 2 decimal places.)

$63,821.00
$48,353.00
$18,925.00
$44,896.00

Solutions

Expert Solution

Computation of overhead cost assigned to Product O6 under activity-based costing:

Overhead cost assigned to Product O6 under activity-based costing = Overheads allocated from Processing + Overheads allocated from Supervising

Overheads allocated from Processing = Machine Hours used by Product O6 * Processing Overhead Rate per Machine Hour

Processing Overhead Rate per Machine Hour = Processing overheads/Total Machine Hours

Processing Overhead Rate per Machine Hour = $46,700/19,170 = $2.44 per Machine Hours

Therefore, Overheads allocated from Processing = $2.44 * 18,400 = $44,896

Overheads allocated from Supervising = Machine Hours used by Product O6 * Supervising Overhead Rate per Batch

Supervising Overhead Rate per Machine Hour = Supervising overheads/Total Batches

Supervising Overhead Rate per Batch = $33,600/2,220 = $15.14 per Batch

Therefore, Overheads allocated from Supervising = $15.14 * 1,250 = $18,925

Hence, Overhead cost assigned to Product O6 under activity-based costing = $44,896 + $18,925 = $ 63,821

Hence option A $63,821 is the correct answer.

ekkarill92 answered 1 year ago

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