In: Accounting
Zimmerman Company manufactures two products, Board 12 and Case 165. Zimmerman’s overhead costs consist of setting up machines, $2,400,000; machining, $5,400,000; and inspecting, $1,800,000. Information on the two products is:
Board 12 Case 165
Direct labor hours 15,000 25,000
Machine setups 600 400
Machine hours 24,000 26,000
Inspections 800 700
Overhead applied to Case 165 using activity-based costing is?
$3,840,000
$4,608,000
$4,992,000
$6,000,000
Overhead applied to Case 165 using activity-based costing is $4,608,000 | ||||||||
Particulars | Amount a | Activity Driver | No of Activity b | Cost per activity c= a/b | No of Activity of Board 12 d | Cost Allocated to Board 12 c*d | No of Activity of case 165 e | Cost Allocated to case 165 c*e |
setting up machines, | 2,400,000.00 | Machine set ups | 1,000.00 | 2,400.00 | 600.00 | 1,440,000.00 | 400.00 | 960,000.00 |
machining | 5,400,000.00 | Machine hours | 50,000.00 | 108.00 | 24,000.00 | 2,592,000.00 | 26,000.00 | 2,808,000.00 |
inspecting | 1,800,000.00 | Inspections | 1,500.00 | 1,200.00 | 800.00 | 960,000.00 | 700.00 | 840,000.00 |
Total Overhead | 9,600,000.00 | 4,992,000.00 | 4,608,000.00 |