Question

Groleau Corporation has an activity-based costing system with three activity cost pools--Processing, Setting Up, and Other. The company's overhead costs, which consist of factory utilities and indirect labor, are allocated to the cost pools in proportion to the activity cost pools' consumption of resources. Costs in the Processing cost pool are assigned to products based on machine-hours (MHs) and costs in the Setting Up cost pool are assigned to products based on the number of batches. Costs in the Other cost pool are not assigned to products. Data concerning the two products and the company's costs and activity-based costing system appear below:

Factory utilities (total)	$	34,800
Indirect labor (total)	$	9,500

Distribution of Resource Consumption Across Activity Cost Pools

	Processing	Setting Up	Other
Factory utilities	0.30	0.30	0.40
Indirect labor	0.50	0.40	0.10

	MHs	Batches
Product S8	3,200	900
Product F1	7,500	700
Total	10,700	1,600

	Product S8			Product F1
Sales (total)	$	72,250		$	98,400
Direct materials (total)	$	24,600		$	36,200
Direct labor (total)	$	32,200		$	43,900

Required:

a. Assign overhead costs to activity cost pools using activity-based costing.

b. Calculate activity rates for each activity cost pool using activity-based costing.

c. Determine the amount of overhead cost that would be assigned to each product using activity-based costing.

d. Determine the product margins for each product using activity-based costing.

Answer 1

The answer has been presented in the supporting sheet. For detailed answer refer to the supporting sheet.