Question

A company uses activity-based costing to determine the costs of its three products: A, B, and C. The budgeted cost and activity for each of the company's three activity cost pools are shown in the following table:

				Budgeted Activity
Activity Cost Pool	Budgeted Cost			Product A			Product B			Product C
Activity 1	$	75,000			6,500			9,500			20,500
Activity 2	$	50,000			7,500			15,500			8,500
Activity 3	$	92,000			3,000			1,500			2,125

How much overhead will be assigned to Product B using activity-based costing?

Multiple Choice

• $64,953.91

• $85,124.79

• $66,263.55

• $217,000.00

• $75,000.00
  
  

  K Company estimates that overhead costs for the next year will be $3,300,000 for indirect labor and $840,000 for factory utilities. The company uses direct labor hours as its overhead allocation base. If 80,000 direct labor hours are planned for this next year, what is the company's plantwide overhead rate?

  Multiple Choice

• $0.02 per direct labor hour.

• $51.75 per direct labor hour.

• $41.25 per direct labor hour.

• $10.50 per direct labor hour.

• $0.10 per direct labor hour.

Answer 1

1.

Activity	Total Cost pool	Total Budgeted Activity		Product B Activity	Product B Overhead Assigned
Activity 1	75,000.00	36,500.00	2.05	9,500.00	19,520.55
Activity 2	50,000.00	31,500.00	1.59	15,500.00	24,603.17
Activity 3	92,000.00	6,625.00	13.89	1,500.00	20,830.19
Product B Overhead Assigned	64,953.91

2.

Company's plantwide overhead rate = (3,300,000 + 840,000)/80,000

=51.75 Per Direct Labor Hour