Question

Meester Corporation has an activity-based costing system with three activity cost pools--Machining, Order Filling, and Other. In the first stage allocations, costs in the two overhead accounts, equipment depreciation and supervisory expense, are allocated to three activity cost pools based on resource consumption. Data used in the first stage allocations follow: Overhead costs: Equipment expense $ 83,000 Supervisory expense $ 6,700 Distribution of Resource Consumption Across Activity Cost Pools: Activity Cost Pools Machining Order Filling Other Equipment expense 0.50 0.30 0.20 Supervisory expense 0.50 0.20 0.30 Machining costs are assigned to products using machine-hours (MHs) and Order Filling costs are assigned to products using the number of orders. The costs in the Other activity cost pool are not assigned to products. Activity data for the company's two products follow: Activity: MHs (Machining) Orders (Order Filling) Product M0 1,960 1,430 Product H2 9,030 2,160 Total 10,990 3,590 What is the overhead cost assigned to Product H2 under activity-based costing? (Round your intermediate calculations to 2 decimal places.)

Answer 1

Working Note 1

Primary allocation of OH costs to Activity Cost Pools
Expenditure	Machining	Orders Filling	Others	Total
Equipment Depreciation (0.5:0.3:0.2)	$       41,500.00	$            24,900.00	$      16,600.00	$      83,000.00
Supervisory Expenses ( 0.5:0.2:0.3)	$         3,350.00	$              1,340.00	$        2,010.00	$        6,700.00
Total	$       44,850.00	$            26,240.00	$      18,610.00

Given Cost Drivers Data
Product	Machine Hours	Number of Orders
Product M0	1960	1430
Product H2	9030	2160
Total	10990	3590

Allocation of Activity Cost Pools to Product H2
	Machining	Orders Filling
A.Total Cost in Pool (WN 1)	$44850.00	$26240.00
B. Total Cost Driver Qty (Given)	10990.00	3590.00
C. Cost per Activity ( A/B)	$4.08	$7.31
D. Cost Drivers used in Product H2 (Given)	9030.00	2160.00
E. Cost attributable to Product H2 ( CxD)	$36851.27	$15787.86

Total Overhead alloacted to Product H2 on Activity Based Costing is $52639.13.

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