Question
ABC Ltd. manufactures two products, Product X and Product Y. The company uses activity-based costing (ABC) to allocate overhead costs to products. The following information
ABC Ltd. manufactures two products, Product X and Product Y. The company uses activity-based costing (ABC) to allocate overhead costs to products. The following information is available for the current period:
Overhead Costs: $200,000
Activity Cost Pools and Activity Measures:
Activity Cost Pool: Product Design
Activity Measure: Number of Designs
Total Cost: $60,000
Number of Designs: 12
Activity Cost Pool: Machine Setup
Activity Measure: Number of Setups
Total Cost: $80,000
Number of Setups: 20
Activity Cost Pool: Quality Control
Activity Measure: Number of Inspections
Total Cost: $60,000
Number of Inspections: 30
Activity Cost Pool: Material Handling
Activity Measure: Pounds of Material Handled
Total Cost: $100,000
Pounds of Material Handled: 10,000
Product X and Product Y each require one design, five setups, five inspections, and 2,000 pounds of material. Calculate the total overhead cost allocated to each product using activity-based costing.
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