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 $ 145,000 4,000 2,000 6,000 Production orders orders 68,360 1,100 300 1,400 Order size MHs 1,069,190 2,700 3,100 5,800 $ 1,282,550 The total overhead applied to Product P4 under activity-based costing is closest to:

Answer 1

Answer:

$634,443

Explanation:

The computation of total overhead applied to Product P4 under activity-based costing is shown below:-

                                                                               

Activity        Expected               Expected           Activity  

                         costs                 Activity                Rate    

                         a                         b                      c =  a ÷ b

Labor related $145,000     6,000 DLHs         24.17 per DLHs

Production

orders           $68,360        1,400 orders     48.83 Per orders

Order size   $1,069,190      5,800 MHs       184.34 per MHs

                         Product P4

Activity driver            Overhead

Incurred                   Assigned

    d                                 e = c × d

2,000                              $48,340

300                                 $14,649

3,100                               $571,454

Total overhead cost       $634,443