Question

II. Activity Based-Costing

Honda Corporation is a diversified manufacturer which builds many types of engine-equipped transportation vehicles. The Electronic Bicycle Division (EBD) produces two types of engine-equipped bicycles. The EBD’s activity-based costing system contains the following six activity cost pools and activity rates.

Activity Cost Pool Activity Rates

Supporting direct labor $12 per direct labor-hour

Machine processing $8 per machine hour

Machine set-ups $100 per set up

Production orders $180 per order

Shipments $28 per shipment

Product sustaining $1,680 per product

Activity data have been supplied for the following products:

                                                                                                Total Expected Activity

                                                                                   American Model European Model

Number of units produced per year 100 200

Direct Labor Hours 40 60

Machine-hours 120 180

Machine set-ups 2 5

Production Orders 4 4

Shipments 5 10

Product sustaining 1 1

Required:

How much total overhead cost would be assigned to the American and European models using the activity-based costing systems?

Answer 1

Solution: -

Explanation: -

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