Question

Doede Corporation uses activity-based costing to compute product margins. In the first stage, the activity-based costing system allocates two overhead accounts--equipment depreciation and supervisory expense--to three activity cost pools--Machining, Order Filling, and Other--based on resource consumption. Data to perform these allocations appear below:

Overhead costs:

Equipment depreciation	$	46,000
Supervisory expense	$	12,200

Distribution of Resource Consumption Across Activity Cost Pools:

	Activity Cost Pools
	Machining	Order Filling		Other
Equipment depreciation	0.50	0.20		0.30
Supervisory expense	0.50	0.10		0.40

In the second stage, Machining costs are assigned to products using machine-hours (MHs) and Order Filling costs are assigned to products using the number of orders. The costs in the Other activity cost pool are not assigned to products.

Activity:

	MHs (Machining)	Orders (Order Filling)
Product W1	5,940	124
Product M0	14,600	923
Total	20,540	1,047

Finally, sales and direct cost data are combined with Machining and Order Filling costs to determine product margins.

Sales and Direct Cost Data:

	Product W1		Product M0
Sales (total)	$	66,500	$	61,600
Direct materials (total)	$	30,700	$	23,100
Direct labor (total)	$	19,300	$	35,200

What is the overhead cost assigned to Product W1 under activity-based costing? (Round your intermediate calculations to 2 decimal places and your final answer to nearest whole dollar amount.)

Multiple Choice

$8,435

$29,100

$9,669

$1,234

Answer 1

Allocation of Overhead Costs
	Machining	Order Filling	Other	Total
Equipment Depreciation	$23,000	$9,200	$13,800	$46,000
Supervisory expense	$6,100	$1,220	$4,880	$12,200
Totals	$29,100	$10,420	$18,680	$58,200
Computation of Overhead Rates
	Machining	Order Filling
Total Overheads	$29,100	$10,420
Total Machine hours / Order fillings	20540	1047
Rate per unit	$1.42	$9.95
Allocation of Overead to Products
	W1	MO
Machining	$8,434.80	$20,732.00
Order filling	$1,233.80	$9,183.85
Total	$9,668.60	$29,915.85
Hence the correct option is $9,669