Question

Reck 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: Machining, $11,700; Order Filling, $17,800; and Other, $13,500. 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 data appear below: MHs (Machining) Orders (Order Filling) Product P7 6,900 200 Product V8 3,100 800 What is the overhead cost assigned to Product V8 under activity-based costing? Garrison 16e Rechecks 2018-07-24

Answer 1

Answer:

$17,867

Explanation:

The computation of the overhead cost assigned to Product V8 is shown below:

                               (a)                 (b)       (a × b)        c         (a × b × c)

Overhead Activity  Overhead    Driver    ABC     V8          V8

                 driver     amount       quantity  Rate  Driver    Overhead

Maching

Costs        Machine

                 Hours     $11,700        10000        1.17    3100        3627

Order

filling     No of orders $17,800     1000           17.8   800         14240

Total V8 overhead cost assigned is

= $3,627 + $14,240

= $17,867