Question

Hane Corporation uses the following activity rates from its activity-based costing to assign overhead costs to products: Activity Cost PoolActivity RateAssembling products$8.90per assembly hourProcessing customer orders$31.23per customer orderSetting up batches$43.72per batch Data for one of the company's products follow: Product U94WNumber of assembly hours389Number of customer orders53Number of batches61 How much overhead cost would be assigned to Product U94W using the activity-based costing system

Answer 1

Answer:

= $7,784.21

Explanation:

Activity-based costing is a form of absorption costing where overheads are charged to product using cost drivers. Under this method, overheads are first analyzed and categorized by the activities responsible for them and then charged to product based on the amount of benefits enjoyed using cost drivers.

The amount to be charged to  the product as overhead for each activity

= activity rate × no of cost drivers consumed

= ($8.90 × 389) +( $31.23 × 53 (  $43.72 × 61)

= $7,784.21