Bossle Corporation uses an activity-based costing system with three activity cos

Question

Bossle Corporation uses an activity-based costing system with three activity cost pools. The company has provided the following data concerning its costs and its activity based costing system: How much cost, in total, would be allocated in the first-stage allocation to the Assembly activity cost pool $309,300 $77,700 $296,633 $427,350The manufacturing overhead budget at Latronlca Corporation is based on budgeted direct labor-hours. The direct labor budget indicates that 6,000 direct labor-hours will be required in August. The variable overhead rate is $8.40 per direct labor-hour. The company's budgeted fixed manufacturing overhead is $109,800 per month, which includes depreciation of $24,970. All other fixed manufacturing overhead costs represent current cash flows. The company recomputes its predetermined overhead rate every month. The predetermined overhead rate for August should be: $26.70 $23.20 $8.40 $18.30

Explanation / Answer

Part I:

Cost Allocated to Assembly activity cost pool = [346000 x 55%] + [253000 x 40%] + [178000 x 10%]

= $309300

Part II:

Predetermined Overhead Rate = Variable Overhead Rat + FIxed Overhead Rate

= 8.40 + [109800 / 6000]

= $26.70

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