Question

Weirick, Inc., manufactures and sells two products: Product T8 and Product P4. The company has an activity-based costing system with the following activity cost pools, activity measures, and expected activity:

		Estimated		Expected Activity
Activity Cost Pools	Activity Measures	Overhead Cost		Product T8	Product P4	Total
Labor-related	DLHs	$	110,800	5,600	2,800	8,400
Production orders	orders		52,260	800	400	1,200
Order size	MHs		817,390	3,000	3,300	6,300
		$	980,450

The total overhead applied to Product P4 under activity-based costing is closest to: (Round your intermediate calculations to 2 decimal places.)

rev: 03_25_2018_QC_CS-119201

Multiple Choice

• $765,130

• $428,142

• $482,494

• $869,650

Answer 1

Solution:

Computation of Activity rates
Activity Cost Pool	Total Cost	Total Activity	Activity rate
Labor related	$1,10,800	8400	$13.19	per DLH
production orders	$52,260	1200	$43.55	per order
Order size	$8,17,390	6300	$129.74	per MH
Computation of Overhead allocated to Product P4
Activity Cost Pool	Activity rate	Activity usage by P4	Overhead assigned
Machine related	$13.19	per DLH	2800	$36,932
Batch Setup	$43.55	per order	400	$17,420
Order size	$129.74	per MH	3300	$4,28,142
Total Overhead allocated to Product P4	$4,82,494

Hence third option is correct.