Cleveland Choppers manufactures two types of motorcycles, a Base and a Loaded model. The following activity...
Cleveland Choppers manufactures two types of motorcycles, a Base
and a Loaded model. The following activity and costs have been
gathered:
| Product | Number of Components |
Number of Setups |
Number of Direct Labor Hrs |
||||||
| Base | 15 | 20 | 700 | ||||||
| Loaded | 25 | 40 | 600 | ||||||
| Overhead costs | $ | 27,000 | $ | 22,500 | |||||
The number of components and number of setups are chosen as
activity-cost drivers for overhead. Assuming an ABC costing system
is being used, what is the total overhead cost assigned to the Base
model?
Multiple Choice
-
$15,450.
-
$15,625.
-
$13,500.
-
$21,375.
-
$17,625.
Homework Answers
Answer- The total overhead cost assigned to the Base model = $17625.
Explanation- Total overhead cost assigned to the Base model = {($27000*15 components/40 components)+($22500*20 setups/60 setups)}
= $10125+$7500
= $17625
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