Computer Parts, Inc., a manufacturer of computer chips, employs activity-based c

Question

Computer Parts, Inc., a manufacturer of computer chips, employs activity-based costing. The following budgeted data for each of the activity cost pools is provided below for the year 2010. Activity Cost Pool Estimated Overhead Expected Use of Cost Drivers per Activity Ordering & receiving $ 92,800 14,200 orders Etching 483,700 62,300 machine hours Soldering 1,761,000 443,000 labor hours For 2010, the company had 11,000 orders and used 50,000 machine hours, and labor hours totaled 500,000. What is the total overhead applied?

Explanation / Answer

First divide each of the estimated activity cost pool items by each of the cost drivers to get your unit amount. Then multiply the unit amount in each category by the 2008 totals. Add them up to get the total overhead.

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