Question

Gould Corporation uses the following activity rates from its activity-based costing to assign overhead costs to products:

Information is given as Activity Cost Pool; Amount; Activity Rate
Setting up batches; $59.06; per batch
Processing customer orders; $72.66; per customer order
Assembling products; $3.75; per assembly hour


Data concerning the two products is below:
Product K91B:
Number of batches = 84; number of customer orders = 32; number of assembly hours = 483


Product F650:
Number of batches = 50; number of customer orders = 43; number of assembly hours = 890


How much overhead cost would be assigned to Product K91B using the activity-based costing system?
a. $9,097.41
b. $81,146.53
c. $4,961.04
d. $135.47

Answer 1

Answer:

a. $9,097.41

Explanation:

The computation of the overhead cost assigned to Product K91B is shown below:

= Setting up batches × number of batches + Processing customer orders × number of customer orders + Assembling products ×  number of assembly hours

= $59.06 per batch × 84 + $72.66 per customer order  × 32 + $3.75  number of assembly hours × 483

= $4,961.04 + $2,325.12 + $1,811.25

= $9,097.41