In: Accounting
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.)
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 | ||