Question

Answer the following two questions using the information below: Barnes Corporation manufactures two models of office...

Answer the following two questions using the information below:

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

Number of setups and number of components are identified as activity-cost drivers for overhead. Assuming an activity-based costing system is used, what is the total amount of overhead costs assigned to the standard model?

A.

$24,800
B.

$35,200
C.

$37,500
D.

$22,500
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Homework Answers

Answer #1
A.

$24,800

Working:

Overhead cost assigned to Standard Model:
With respect of Number of setups = $       20,000 x 22 / (22+28) = $         8,800
With respect of Number of components = $       40,000 x 8 / (8+12) = $       16,000
Total $       24,800
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