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QUESTION 21 Mussenden Corporation has an activity-based costing system with three activity cost poolsMachining, Order Filling, and Other. In the first stage allocations, costs in

QUESTION 21

  1. Mussenden Corporation has an activity-based costing system with three activity cost poolsMachining, Order Filling, and Other. In the first stage allocations, costs in the two overhead accounts, equipment depreciation and supervisory expense, are allocated to three activity cost pools based on resource consumption. Data used in the first stage allocations follow:

    Overhead costs:
    Equipment depreciation $47,000
    Supervisory expense $2,000
    Distribution of Resource Consumption Across Activity Cost Pools:
    Activity Cost Pools
    Machining Order Filling Other
    Equipment depreciation 0.60 0.10 0.30
    Supervisory expense 0.50 0.20 0.30

    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 P4 3,600 300
    Product S4 6,400 700
    Total 10,000 1,000

    What is the overhead cost assigned to Product S4 under activity-based costing?

    $18,688

    $22,258

    $24,500

    $3,570

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