Question

Meester Corporation has an activity-based costing system with three activity cost pools--Machining, 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 $87,000

Supervisory expense  $ 9,400 

Distribution of Resource Consumption Across Activity Cost Pools: 

	Activity Cost Pools
	Machining	Order Filling	Other
Equipment expense	0.60	0.20	0.20
Supervisory expense	0.60	0.10	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: 

 What is the overhead cost assigned to Product H2 under activity-based costing? (Round your intermediate

 Multiple Choice

 $42,840

 $55,135

 $66,320

 $12,295

Answer 1

--Correct Answer = Option #2: $ 55,135

--Working

Overhead assigned to H2:
Machining	$42,843	[(79300 x 0.6)+(4800 x 0.6)) x 9000/10600]
Order filling	$12,288	[(79300 x 0.20)+(4800 x 0.10)) x 1880/2500]
Total	$55,131	[$4 difference is due to rounding off]