Question
Corporation has an activity-based costing system with three activity cost poolsProcessing, Supervising, and Other. In the first stage allocations, costs in the two overhead accounts,
Corporation has an activity-based costing system with three activity cost poolsProcessing, Supervising, and Other. In the first stage allocations, costs in the two overhead accounts, equipment expense and indirect labor, are allocated to the three activity cost pools based on resource consumption. Data used in the first stage allocations follow:
Overhead costs: | |
Equipment expense | $73,000 |
Indirect labor | $1,000 |
Distribution of Resource Consumption Across Activity Cost Pools:
Processing | Supervising | Other | |
Equipment expense | 20% | 10% | 70% |
Indirect labor | 20% | 20% | 60% |
In the second stage, Processing costs are assigned to products using machine-hours (MHs) and Supervising costs are assigned to products using the number of batches. The costs in the Other activity cost pool are not assigned to products. Activity data for the company's two products follow:
MHs (Processing) | Batches (Supervising) | |
Product W3 | 7,600 | 100 |
Product H3 | 2,400 | 900 |
Total | 10,000 | 1,000 |
Finally, the costs of Processing and Supervising are combined with the following sales and direct cost data to determine product margins.
Product W3 | Product H3 | |
Sales (total) | $159,500 | $154,100 |
Direct materials (total) | $66,300 | $55,300 |
Direct labor (total) | $77,800 | $84,100 |
A. How much overhead cost is allocated to the Supervising activity cost pool under activity-based costing first stage of allocation?
B. The activity rate for the Supervising activity cost pool (per batch) under activity-based costing is?
C. What is the overhead cost assigned to Product H3 under activity-based costing?
D. What is the product margin for Product H3 under activity-based costing?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
![blur-text-image](https://dsd5zvtm8ll6.cloudfront.net/includes/images/document_product_info/blur-text-image.webp)
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
![blur-text-image](https://dsd5zvtm8ll6.cloudfront.net/includes/images/document_product_info/blur-subtext-image.webp)
Step: 3
![blur-text-image](https://dsd5zvtm8ll6.cloudfront.net/includes/images/document_product_info/blur-subtext-image.webp)
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started