Question

Activity rates from Mcelderry Corporation's activity-based costing system are listed below. The company uses the activity rates to assign overhead cost to products:
Processing customer orders $49.87 per order
Assembling products $2.88 per assembly hour
Setting up batches $18.26 per batch
Last year, Product Q06J involved 10 customer orders, 580 assembly hours, and 12 batches. How much overhead cost would be assigned to Product Q06J using the activity-based costing system?
a) 42,748.02
b) 2,388.22
c) 219.12
d) 71.01

Answer 1

Answer:

b) 2,388.22

Explanation:

Activity Cost Pool        Activity Rates                Activity   Overhead cost

Processing customer  49.87 per order                   10             498.7

orders

Assembling products   2.88 per assembly hour    580          1670.4

Setting up batches       18.26 per batch                    12            219.12

Total Overhead cost assigned                                               2,388.22