Umanzor Corporation uses activity-based costing to assign overhead costs to prod

Question

Umanzor Corporation uses activity-based costing to assign overhead costs to products. Overhead costs have already been allocated to the company's three activity cost pools as follows: Processing, $51,700; Supervising, $34,500; and Other, $22,400. Processing costs are assigned to products using machine-hours (MHs) and Supervising costs are assigned to products using the number of batches. The costs in the Other activity cost pool are not assigned to products. Activity data appear below:

15,930            

1,700            

What is the overhead cost assigned to Product S5 under activity-based costing?

MHs (Processing) Batches (supervising)   Product S5 14,800             1,350               Product F5 1,130             350               Total

15,930            

1,700            

Explanation / Answer

Calculation of cast per activity

Processing cost = $51700/15930 = $3.24

Supervising cost = $34500/1700 = $20.29

Total cost assigned to product S5 = 1130x$3.24 + 350x$20.29

= $10763.

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