Question
Betterton Corporation uses an activity based costing system to assign overhead costs to products. In the first stage, two overhead costsequipment depreciation and supervisory expense-are
Betterton Corporation uses an activity based costing system to assign overhead costs to products. In the first stage, two overhead costsequipment depreciation and supervisory expense-are allocated to three activity cost poolsMachining, Order Filling, and Otherbased on resource consumption. Data to perform these allocations appear below:
Overhead costs:
Equipment depreciation $ 60,250
Supervisory expense $ 5,400
Distribution of Resource Consumption Across Activity Cost Pools: Activity Cost Pools Machining Order Filling Other Equipment depreciation 0.50 0.30 0.20
Supervisory expense 0.10 0.40 0.50
In the second stage, 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 for the company's two products follow: Activity: MHs (Machining) Orders (Order Filling) Product A8 4,600 2,100 Product K2 25,000 6,300 Total 29,600 8,400 How much overhead cost is allocated to the Machining activity cost pool under activity-based costing in the first stage of allocation?
$12,755
$30,665
$540
$30,125
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