Question

g Wedd Corporation uses activity-based costing to assign overhead costs to products. Overhead costs have already been allocated to the company's three activity cost pools as follows: Processing, $51,000; Supervising, $31,600; and Other, $20,300. Processing costs are assigned to products using machine-hours (MHs) and Supervising costs are assigned to products using the number of batches. The costs in the Other activity cost pool are not assigned to products. Activity data appear below: MHs (Processing) Batches (Supervising) Product O6 15,600 810 Product D7 640 420 Total 16,240 1,230 What is the overhead cost assigned to Product O6 under activity-based costing

Answer 1

Answer:

Total overhead for O6 697,933

Explanation:

First, we solve for the activity rates:

$\left[\begin{array}{ccccc} Activity& Driver& cost pool& Total base& Rate\\Processing&MHS&51000&16240&3.14\\Supervising&batches&31600&1230&25.69\\\end{array}\right]$

Then, we apply this rate to the Product O6 base cost driver  values

$\left[\begin{array}{ccccc}Activity&base&Allocate O6\\Processing&15600&48984\\Supervising&810&20,809\\Total&&69,7933\\\end{array}\right]$