Question

Seneff Corporation uses the following activity rates from its activity-based costing system to assign overhead costs to products.
Activity Cost Pools Activity Rate
Setting up batches $38.50 per batch
Processing Customer orders $86.62 per customer order
Assembling products $7.33 per assembly hour

Data concerning the two products appear below:

Product V91 Product V21
Number of batches 83 27
Number of customer orders 74 7
Number of assembly hours 702 321

Required:
How much overhead cost was assigned to product V91 using the activity-based costing system?

Answer 1

Answer:

Total allocated overhead= $14,751.04

Explanation:

Giving the following information:

Activity Cost Pools Activity Rate

Setting up batches $38.50 per batch

Processing Customer orders $86.62 per customer order

Assembling products $7.33 per assembly hour

Data concerning the two products appear below:

Product V91

Number of batches 83

Number of customer orders 74

Number of assembly hours 702

To allocate overhead, we need to use the following formula:

Allocated MOH= Estimated manufacturing overhead rate* Actual amount of allocation base

Setting up= 38.5*83= 3,195.5

Processing= 86.62*74= 6,409.88

Assembling products= 7.33*702= 5,145.66

Total allocated overhead= $14,751.04