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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 $ 69,000 6 14
Material handling Number of parts 52,000 60 15
Packaging costs Number of units 215,000 112,000 48,000
$ 336,000

What is the total overhead allocated to Product M using the current system?

Multiple Choice

  • $212,800.

  • $215,000.

  • $123,200.

  • $235,200.

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