Handal Corporation uses activity-based costing to compute product margins. Overhead costs have already been allocated to...

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Handal Corporation uses activity-based costing to compute product margins. Overhead costs have already been allocated to...

Handal Corporation uses activity-based costing to compute product margins. Overhead costs have already been allocated to the company's three activity cost pools--Machining, Order Filling, and Other. The costs in those activity cost pools appear below:


Machining	$	6,077
Order Filling	$	16,274
Other	$	5,600

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 appear below:

	MHs (Machining)	Orders (Order Filling)
Product O4	2,000	110
Product S1	8,300	920

Finally, sales and direct cost data are combined with Machining and Order Filling costs to determine product margins.

	Product O4		Product S1
Sales (total)	$	66,100	$	72,600
Direct materials (total)	$	29,800	$	19,000
Direct labor (total)	$	29,600	$	30,700

What is the overhead cost assigned to Product S1 under activity-based costing? (Round the Intermediate calculation to two decimal places and your final answer to nearest whole dollar.)

business accounting

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Answer 1

Answer #1

Correct answer----------$19,443

Working

Calculation of Activity rates
Activity Cost Pool	Activity driver	Overhead Cost (A)	Expected Activity (B)	Activity rate (A/B)
Machining	Number of MHs	$ 6,077	10300	$ 0.59	Per MHs
Order filling	Number of Order	$ 16,274	1030	$ 15.80	Per Order

.

Cost assigned to S1
Activity name	Activity Rates	Activity	ABC Cost
	(A)	(B)	(A x B)
Machining	$ 0.59	8,300.00	$ 4,897
Order filling	$ 15.80	920.00	$ 14,536
Total Overheads assigned			$ 19,433

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Answer 2

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