Question

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Dangerfield Enterprises produces three kinds of golf clubs: Fancy, Light, and Disco. These unique clubs incur overhead costs during production. The manager at Dangerfield Enterprises examined the overhead costs and determined the cost drivers for each cost object.

ABC level	Overhead cost	Cost driver	Fancy	Light	Disco
Unit	$50,000	Number of units	1,000	2,500	1,500
Batch	$60,000	Number of set-ups	50	30	20
Product	$100,000	Percent of usage	45%	25%	30%
Facility	$200,000	Square feet	60,000	40,000	100,000

Using activity based costing, fill in the amount of overhead that is allocated to each product:

	Fancy	Light	Disco
Unit Level:
Batch Level:
Product Level:
Facility Level:

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Answer 1

Answer-

DANGERFIELD ENTERPRISES
ALLOCATION OF OVERHEAD (BASED ON ACTIVITY BASED COSTING METHOD)
PARTICULARS	FANCY	LIGHT	DISCO
Unit Level	($50000*1000 units)/5000 units = $10000	($50000*2500 units)/5000 units = $25000	($50000*1500 units)/5000 units = $15000
Batch Level	($60000*50 setups)/100 setups = $30000	($60000*30 setups)/100 setups = $18000	($60000*20 setups)/100 setups = $12000
Product Level	$100000*45%= $45000	$100000*25%= $25000	$100000*30%= $30000
Facility Level	($200000*60000 sq. feet)/200000 sq. Feet = $60000	($200000*40000 sq. feet)/200000 sq. Feet = $40000	($200000*100000 sq. feet)/200000 sq. Feet = $100000
Total overhead costs	$145000	$108000	$157000