Question

X Company uses an activity-based costing overhead allocation system. It has identified three activities - Setup, Product testing, Packaging - and their respective cost drivers - setup hours, tests, packages. Budgeted activity costs in 2018 were as follows: Activity Budgeted Cost Setup $108,000 Product testing 58,600 Packaging 58,700 The following 2018 cost driver information is available for one of its products, Product X, and for all of its products (including Product X): Product X All Products setup hours 29,700 771,429 tests 49,700 1,172,000 packages 74,700 838,571 How much overhead was allocated to Product X in 2018 [round overhead rate(s) to two decimal places]?

Answer 1

Activities	Costs	Cost drivers	Cost driver total	Overhead rate(Costs/Cost driver total)
Setups	$1,08,000	Setup hours	7,71,429	$0.14	per setup
Product testing	$58,600	No. of test	11,72,000	$0.05	per test
Packaging	$58,700	No. of packages	8,38,571	$0.07	per package
Computation of product cost of X
	Cost drivers	Overhead rate	Cost allocated
Setups	29,700 setups	$0.14	$4,158.00
Product testing	49,700 tests	$0.05	$2,485.00
Packaging	74,700 packages	$0.07	$5,229.00
Total Cost allocated			$11,872.00