Question
In: Accounting
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 2 years agoRelated Solutions
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