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 depreciation	$	96,000
Supervisory expense	$	8,000

Distribution of Resource Consumption Across Activity Cost Pools:

	Activity Cost Pools
	Machining	Order Filling		Other
Equipment depreciation	0.30	0.10		0.60
Supervisory expense	0.60	0.10		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	4,500	400
Product H2	5,500	600
Total	10,000	1,000

How much overhead cost is allocated to the Order Filling activity cost pool under activity-based costing?

Group of answer choices

$9,600

$60,000

$800

$10,400

Answer 1

	Correct Option D i.e. $10,400
a)	First Stage allocation of cost to activity cost pools.
		Machining	Order filling	Other	Total
	Equipment Expense	28,800	9,600	57,600	96,000
	Supervisory Expense	4,800	800	2,400	8,000
	Total cost	33,600	10,400	60,000	104,000