12) Horgen Corporation manufactures two products: Product M68B and Product H27T.

Question

12) Horgen Corporation manufactures two products: Product M68B and Product H27T. The company is considering implementing an activity-based costing (ABC) system that allocates its manufacturing overhead to four cost pools. The following additional information is available for the company as a whole and for Products M68B and H27T Activity Cost Pool Machining Machine setups Product design Order size Activity Measure Total Cost S 299,000 13,000 MHs S 240,000 400 setups Total Activity Machine-hours Number of setups Number of products Direct labor-hours 80,000 290,000 10,000 DLHs 2 products Product M68B Product H27T Activity Measure 6,000 250 Machine-hours Number of setups Number of products Direct labor-hours 7,000 150 4,000 6,000 Using the ABC system, how much total manufacturing overhead cost would be assigned to Product H27T? A) $291,000 B) $174,000 C) $465,000 D) $454.500

Explanation / Answer

Calculate total manufacturing overhead cost assigned to product H27T :

so answer is c) $465,000

Product H27T Machining 161000 Machine setup 90000 Product design 40000 Order size 174000 Total 465000

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