Question
Manton Corporation uses an activity based costing system to assign overhead costs to products. In the first stage, two overhead costsequipment expense and indirect laborare
Manton Corporation uses an activity based costing system to assign overhead costs to products. In the first stage, two overhead costsequipment expense and indirect laborare allocated to the three activity cost poolsProcessing, Supervising, and Otherbased on resource consumption. Data to perform these allocations appear below:
Overhead costs: | ||
Equipment expense | $ | 57,500 |
Indirect labor | 10,500 | |
|
Distribution of Resource Consumption Across Activity Cost Pools: | |||||||||
Activity Cost Pools | |||||||||
Processing | Supervising | Other | |||||||
Equipment expense | 0.60 | 0.20 | 0.20 | ||||||
Indirect labor | 0.10 | 0.30 | 0.60 | ||||||
|
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:
Activity: | |||||||
MHs (Processing) | Batches (Supervising) | ||||||
Product Z5 | 7,250 | 2,400 | |||||
Product C8 | 17,750 | 1,600 | |||||
Total | 25,000 | 4,000 |
| ||||
|
How much overhead cost is allocated to the Processing activity cost pool under activity-based costing in the first stage of allocation?
$9,550
$35,550
$34,500
$1,050
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started