X Company uses an activity-based costing overhead allocation system. It has iden
ID: 2344919 • Letter: X
Question
X Company uses an activity-based costing overhead allocation system. It has identified three activities and three cost drivers. The activities and budgeted costs are as follows:Activity Budgeted Cost
Setup $108,000
Purchasing 58,000
Machine Maintenance 56,000
The following cost driver information is available for the company's only two products, A and B:
Product A Product B
setup hours $27,400 $68,200
purchase orders 53,900 43,200
machine hours 65,800 45,200
How much overhead was allocated to Product A?
Explanation / Answer
setup hours cost for Product A =$108,000 *$27,400/($27,400+ $68,200 ) =$30953.9749 purchase orders for Product A =58,000 *53,900/(53,900 +43,200 ) =$ $32,195.6746 machine hours for Product A= 56,000*65,800/( 65,800 +45,200 ) =$33196.3964 Total overhead allocated to Product A = $96,346.05
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.