Question

Desjarlais Corporation uses the following activity rates from its activity-based costing to assign overhead costs to products.
Activity Cost Pools Activity Rate
Setting up batches $ 87.25 per batch
Assembling products $ 6.38 per assembly hour
Processing customer orders $ 53.91 per customer order
Data concerning two products appear below:
Product S96U Product Q06F
Number of batches 34 45
Number of assembly hours 105 820
Number of customer orders 17 29
Required:
a. How much overhead cost would be assigned to Product S96U using the company's activity-based costing system?
b. How much overhead cost would be assigned to Product QO6F using the company's activity-based costing system?

Answer 1

Answer:

Results are below.

Explanation:

To allocate overhead, we need to use the following formula:

Allocated MOH= Estimated manufacturing overhead rate* Actual amount of allocation base

S96U:

Setting up batches= 87.25*34= $2,966.5

Assembling products= 6.38*105= $669.9

Processing customer orders= 53.91*17= $916.47

Total allocated costs= $4,552.87

QO6F:

Setting up batches= 87.25*45= $3,926.25

Assembling products= 6.38*820= $5,231.6

Processing customer orders= 53.91*29= $1,563.39

Total allocated costs= $10,721.24