Question
Tony Corporation has established the following activity pools and cost drivers: Activity Pool Budgeted Overhead Cost Cost Driver Machine setup Activity $150,000 Number of machine
Tony Corporation has established the following activity pools and cost drivers:
Activity Pool | Budgeted Overhead Cost | Cost Driver |
Machine setup Activity | $150,000 | Number of machine setups |
Material handling Activity | 52,500 | Units of raw material |
Quality control (inspection) Activity | 37,500 | Number of inspections |
Miscellaneous Activity | 90,000 | Machine hours |
Total | $330,000 |
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Activity Pool | Budgeted Level for Cost Driver |
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Machine setup Activity | 100 setups |
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Material handling Activity | 50,000 units |
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Quality control (inspection) Activity | 1,000 inspections |
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Miscellaneous Activity | 10,000 machine hours |
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Order no. 522 has the following production requirements: | ||
Machine setups | 5 setups |
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Raw material | 1,000 units |
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Inspections | 12 inspections |
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Machine hours | 600 machine hours |
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Required: Suppose that Tony Corporation was to use a single, predetermined overhead rate based on machine hours. Calculate total overhead assigned to order no. 522 (according to the traditional costing using predetermined overhead rate)
Select one:
a. $12,000
b. $19,800
c. $13,500
d. $12,600
e. $13,200
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