Capizzi Corporation has an activity-based costing system with three activity cos

Question

Capizzi Corporation has an activity-based costing system with three activity cost pools-Machining, Order Filling, and Other. In the first stage allocations, costs in the two overhead accounts, equipment depreciation and supervisory expense, are allocated to three activity cost pools based on resource consumption. Data used in the first stage allocations follow:

Activity Cost Pools

Machining costs are assigned to products using machine-hours (MHs) and Order Filling costs are assigned to products using the number of orders. The costs in the Other activity cost pool are not assigned to products. Activity data for the company's two products follow:

10,210          

2,890            

What is the overhead cost assigned to Product V2 under activity-based costing? (Round your intermediate calculations to 2 decimal places and your final answer to nearest whole dollar.)

$20,976

$40,951

$70,560

$61,927

Capizzi Corporation has an activity-based costing system with three activity cost pools-Machining, Order Filling, and Other. In the first stage allocations, costs in the two overhead accounts, equipment depreciation and supervisory expense, are allocated to three activity cost pools based on resource consumption. Data used in the first stage allocations follow:

Explanation / Answer

Machining Cost
(81,200 X.5)= 40,600
11,200 X .5= 5600

Total            = 46,200

Order Filling
81200 X.3= 24360
11200 X .2= 2240

Total          =26,600

Machining cost per hour = total machining cost/ total machining hours

= $46,200/ 10,210 MHs = $4.52 per MH

Order Filling = $26,600 ÷ 2,890 orders = $9.20 per order

Calculation for overhead cost assigned to product V2

Machining cost = Cost per hour x no. of hours

= $4.52 per MH × 9,060 MHs =                  $40,951.20

Order Filling = cost per order x no. of orders

         =$9.20 × 2,280 orders =                20976
Total $61,927.20

Option D is correct

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