Umanzor Corporation uses activity-based costing to assign overhead costs to prod
ID: 2604949 • Letter: U
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, $50,500; Supervising, $28,600; and Other, $24,700. 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:
11,790
1,930
What is the overhead cost assigned to Product S5 under activity-based costing? (Round your intermediate calculations to 2 decimal places.)
a.$21,044.40
b. $67,696.40
c. $52,228.40
d. $46,652.00
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, $51,500; Supervising, $35,800; and Other, $26,600. 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:
16,480
1,880
$2.81 per MH
$3.43 per MH
$3.13 per MH
$7.56 per MH
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, $50,500; Supervising, $28,600; and Other, $24,700. 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:
Explanation / Answer
Answer
Calculation of Activity Rate
No. of activity drivers
Overheads
Amount (A)
Activity driver
Product S5
Product F5
Total no of drivers (B)
Activity rate (A/B)
Processing
50500
MHs
10900
890
11790
4.28
Supervising
28600
Batches
1420
510
1930
14.82
Other
24700
N/A
0
0
N/A
Calculation of cost assigned on the basis of above Activity Rate
Product S5
Cost
Rate per driver
No of driver
Cost assigned
Processing
4.28
10900
46652
Supervising
14.82
1420
21044.4
Other
0
0
0
Total cost assigned
67696.4
Hence, the correct answer is $67696.40 (OPTION – B)
Calculation of Activity rate
No. of activity drivers
Overheads
Amount (A)
Activity driver
Product S5
Product F5
Total no of drivers (B)
Activity Rate (A/B)
Processing
51500
MHs
15300
1180
16480
3.125
Supervising
35800
Batches
1060
820
1880
19.04255
Other
26600
N/A
0
0
N/A
Since, the activity rate for PROCESSING is asked which is coming as $3.125 per MHs, the CORRECT ANSWER is OPTION – C $3.13 per MH as it is the closest to the figure calculated above.
No. of activity drivers
Overheads
Amount (A)
Activity driver
Product S5
Product F5
Total no of drivers (B)
Activity rate (A/B)
Processing
50500
MHs
10900
890
11790
4.28
Supervising
28600
Batches
1420
510
1930
14.82
Other
24700
N/A
0
0
N/A
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