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ECO Plc Ltd. uses an activity based costing system to assign overhead costs to products. In...

ECO Plc Ltd. uses an activity based costing system to assign overhead costs to products. In the first stage, two overhead costs - Electricity expense and Water expense - are allocated to three activity cost pools - Grinding, Painting, and Other - based on resource consumption. Data to perform these allocations appear below:

Overhead Costs:

  • Electricity expense: $195,000
  • Water expense: $185,000

Distribution of Resource Consumption across Activity Cost Pools:

Overhead Cost Activity Cost Pools
Grinding Painting Other
Electricity expense 0.40 0.34 0.26
Water expense 0.42 0.32 0.26

The second stage of allocation is done by assigning the Grinding costs to products on the basis of machine hours while products are assigned Painting costs based on direct labor hours. Costs assigned to the Other activity pool are not further assigned to products. Activity information for ECO's only two products is below:

machine hours direct labor hours
Product XR-4: 3,200 1,500
Product VM-022: 1,900 2,600
Total: 5,100 4,100

How much overhead cost is assigned to the Painting activity cost pool under activity based costing in the first stage of allocation?

A. 125.500

B. 155,700

C. 141,100

D. 136,400

E. 74,00

The activity rate for the Painting activity cost pool under activity based costing is closest to?

A. 30.61

B. 15.24

C. 28.24

D. 14.44

E. 18.05

What is the overhead cost assigned to Product VM-022 under activity based costing?

A. 137,591

B. 103,921

C. 177,328

D. 78,000

E. 74,000

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ekkarill92 answered 1 year ago
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