Question

Wedd Corporation uses activity-based costing to assign overhead costs to products. Overhead costs have already been allocated to the company's three activity cost pools as follows: Processing, $51,200; Supervising, $31,400; and Other, $24,000. Processing costs are assigned to products using machine-hours (MHs) and Supervising costs are assigned to products using the number of batches. The costs in the Other activity cost pool are not assigned to products. Activity data appear below:

	MHs (Processing)	Batches (Supervising)
Product O6	15,000	1,490
Product D7	1,070	1,030
Total	16,070	2,520

What is the overhead cost assigned to Product O6 under activity-based costing?

Answer 1

Cost Drivers Rate
Activity	Cost Drivers	Total Activity Amount (A)	Level of Activity (B)	Activity Rate (C=A/B)
Processing	Machine Hours	$      51,200.00	16070.00	$     3.19	Per Machine Hour
Supervising	Number of Batches	$      31,400.00	2520.00	$   12.46	Per batch
		$         82,600.00

Cost assigned to Product O6
	Activity rate(A)	Activity Driver Incurred (B)	Overhead Assigned (C=A*B)
Processing	$   3.19	15000	$    47,790.91
Supervising	$ 12.46	1490	$     18,565.87
Total Overheads Assigned			$         66,356.79

Total overheads assigned to Product O6 =$66356.79