Barnes Corporation manufactures two models of office chairs, a standard and a deluxe model. The following activity and cost information has been compiled.
Number of Number of Number of
Product Setups Components Direct Labor Hours
Standard 22 8 375
Deluxe 28 12 225
Overhead costs $20,000 $40,000
Answer:
Barnes Corporation
The total amount of overhead costs assigned to the deluxe model (using an activity-based costing system) is:
= $35,200.
Explanation:
a) Data and Calculations:
Overhead Costs Standard Deluxe Total Overhead Rate
Setups $20,000 22 28 50 $400 ($20,000/50)
Components $40,000 8 12 20 $2,000 ($40,000/20)
Direct Labor Hours 375 225 600
Total overhead costs $60,000
Amount of overhead costs assigned to the deluxe model:
Set up costs = $11,200 (28 * $400)
Components costs = $24,000 (12 * $2,000)
Total overheads assigned = $35,200
