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 Supervisory expense $87,000 $ 9,400 Distribution of Resource Consumption Across Activity Cost Pools: Activity Cost Pools Order Filling 2.30 0.20 Machining 0.60 0.60 Equipment depreciation Supervisory expense Other 0.10 0.20 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: Product MO Product H2 MHS (Machining) 1,510 9,030 10,548 Orders (Order Filling) 1,630 2,250 3,280 Total How much overhead cost is allocated to the Order Filling activity cost pool under activity-based costing? Multiple Choice 0 $19,193 0 $49,575 0 $83,940 0 $27,980

Answer 1

Cost Allocated = Equipment Depreciation*Ratio + Supervisory Expense*Ratio

= 87000*0.3 + 9400*0.2

= $27,980

Cash Receipts for December = 248000*40% + 288000*60%

= $272,000

Cash Disbursement = 248000*75% + 288000*75%*70% - 248000*75%*70% +17500

= $224,500

Hence, difference = $47,500

Note: Purchases of November will be paid in December