Question
Allure Company manufactures and distributes two products, M and XY. Overhead costs are currently allocated using the number of units produced as the allocation base.
Allure Company manufactures and distributes two products, M and XY. Overhead costs are currently allocated using the number of units produced as the allocation base. The controller has recommended changing to an activity-based costing (ABC) system. She has collected the following information:
| Activity | Cost Driver | Amount | M | XY | ||||
| Production setups | Number of setups | $ | 77,000 | 8 | 12 | |||
| Material handling | Number of parts | 56,000 | 56 | 14 | ||||
| Packaging costs | Number of units | 203,000 | 84,000 | 56,000 | ||||
| $ | 336,000 | |||||||
What is the total overhead allocated to Product XY using the current system?
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Fundamentals of Financial Accounting
Authors: Fred Phillips, Robert Libby, Patricia Libby
5th edition
978-0078025914
