Question

Dartmouth Corporation manufactures two models of office​ chairs, a standard and a deluxe model. The following activity and cost information has been​ compiled:

Product	Number of Setups	Number of Components	Number of Direct Labor Hours
Standard	11	6	295
Deluxe	29	13	205
Overhead Costs	​$60,000	​$58,900

Number of setups and number of components are identified as

activityminus−cost

drivers for overhead. Assuming an

activityminus−based

costing system is​ used, what is the total amount of overhead costs assigned to the deluxe​ model?

Answer 1

Setup cost assigned to Deluxe model = Setup Overhead costs x Number of setups required for Deluxe model/Total Number of setups required

= 60,000 x 29/40

= $43,500

Setup cost assigned to Deluxe model= Component Overhead costs x Number of components required for Deluxe model/Total Number of components required

= 58,900 x 13/19

= $40,300

total amount of overhead costs assigned to the deluxe​ model = Setup cost assigned to Deluxe model + Setup cost assigned to Deluxe model

= 43,500 + 40,300

= $83,800

answered by: anonymous