Question

manufactures and sells two products: Product T8 and Product P4. The company has an activity-based costing system with the following activity cost pools, activity measures, and expected activity:

		Estimated		Expected Activity
Activity Cost Pools	Activity Measures	Overhead Cost		Product T8	Product P4	Total
Labor-related	DLHs	$	130,200	11,000	5,500	16,500
Production orders	orders		61,400	1,200	500	1,700
Order size	MHs		960,340	3,100	3,500	6,600
		$	1,151,940

The total overhead applied to Product P4 under activity-based costing is closest to: (Round your intermediate calculations to 2 decimal places.)

Multiple Choice

• $898,940

• $509,285

• $570,740

• $1,021,740

Answer 1

Activity Cost Pool	Total Cost	Budgeted level for Cost Driver	Activity Measure	Activity Rate (Total Cost/Budgeted level for Cost Driver)	Activity Used by product P4	Overhead allocated to Produc P4 (Activity Rate x Activity Used by product P4)
Labor-related	130,200	16,500	DLHs	7.89	5,500	43,395
Production orders	61,400	1,700	orders	36.12	500	18,060
Order size	960,340	6,600	MHs	145.51	3,500	509,285
Total Cost	1,151,940					$570,740

The total overhead applied to Product P4 under activity-based costing is closest to:= $570,740

Third option is correct.

Please give a positive rating if you are satisfied with this solution and if you have any query kindly ask.

Thanks!!!