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
|Activity Cost Pool||Budgeted Cost||Product A||Product B||Product C|
How much overhead will be assigned to Product B using activity-based costing?
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?
$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.
|Activity||Total Cost pool||Total Budgeted Activity||Product B Activity||Product B Overhead Assigned|
|Product B Overhead Assigned||64,953.91|
Company's plantwide overhead rate = (3,300,000 + 840,000)/80,000
=51.75 Per Direct Labor Hour
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