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Company XYZ estimated its total overhead cost is $599610. It is considering implementing activity-based costing. Three cost pools (and activity measures) have been identified:
Company XYZ estimated its total overhead cost is $599610. It is considering implementing activity-based costing. Three cost pools (and activity measures) have been identified: 1) Machine-related (machine-hours), 2) Production orders (number of orders), and 3) Product testing (number of tests). The estimated overhead assigned to the activities are as follows: $200,000 to machine-related, $100,000 to production orders, and $299610 to product testing. Company XYZ produces two products. The following information is available: Activity Machine-related Production orders Product testing Cost driver Number of machine-hours Number of orders Number of tests Direct Labor hours assigned for Product 1: 24768 Direct Labor hours assigned for Product 2: 14771 Product 1 40,000 800 Product 2 10,000 200 6,000 9,000 The company currently uses traditional costing and allocates overhead based on direct labor-hours. a) How much overhead is assigned to Product 1 using traditional costing? $15165 $224003 $357592 $375607
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