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Deemer Corporation has an activity-based costing system with three activity cost pools--Processing, Supervising, and Other. In...

Deemer Corporation has an activity-based costing system with three activity cost pools--Processing, Supervising, and Other. In the first stage allocations, costs in the two overhead accounts, equipment expense and indirect labor, are allocated to the three activity cost pools based on resource consumption. Data used in the first stage allocations follow: Overhead costs: Equipment expense $ 83,000 Indirect labor $ 8,200 Distribution of Resource Consumption Across Activity Cost Pools: Activity Cost Pools Processing Supervising Other Equipment expense 0.40 0.50 0.10 Indirect labor 0.40 0.40 0.20 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 for the company's two products follow: Activity: MHs (Processing) Batches (Supervising) Product F6 13,000 1,160 Product X0 1,130 550 Total 14,130 1,710 What is the overhead cost assigned to Product X0 under activity-based costing? (Round your intermediate calculations to 2 decimal places.)

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Expert Solution

Activity Cost Pools
Processing Supervising Other Total
Equipment expenses $                        33,200 $                                      41,500 $                         8,300 $                                   83,000
Indirect labor $                          3,280 $                                        3,280 $                         1,640 $                                     8,200
Total $                        36,480 $                                      44,780 $                         9,940 $                                   91,200
Computation of ABC rate
Activity OH Costs(Col 1) No. of activity base(Col 2) ABC rate(Col.1/Col.2)
Processing $                        36,480                                          14,130                               2.58 per labor hour
Supervising $                        44,780                                            1,710                             26.19 per order
Total Cost $                        81,260
So Option A is the answer
Calculation of Product Costs
Product F6 Product X0
Activity Based usage Activity Based usage*ABC rate Activity Based usage Activity Based usage*ABC rate
Processing 13000 $                                      33,540 1130 $                                     2,915
Supervising 1160 $                                      30,380 550 $                                   14,405
Total Overhead Cost allocated $                                      63,920 $                                   17,320

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