Question

Question 1
Kapoor 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 $86.50 per batch
Assembling products $4.63 per assembly hour
Processing customer orders $52.16 per customer order

Data concerning two products appear below:

Product J00A Product S06U
Number of batches 34 43
Number of assembly hours 105 812
Number of customer orders 17 32

Required:
a. How much overhead cost would be assigned to Product J00A using the company's activity-based costing system?
b. How much overhead cost would be assigned to Product S06U using the company's activity-based costing system?

Overhead Cost:
There are some expenses incurred at the time of manufacturing of products and services that are not directly attributable to the finished products. These expenses are known as manufacturing overheads or indirect expenses.

Answer 1

The overhead cost would be assigned to Product J00A using the company's activity-based costing system is $4313.87.

How to calculate the cost?

The overhead cost that would be assigned to Product J00A using the company's activity-based costing system will be:

= ($86.50 × 34) + ($4.63 × 105) + ($52.16 × 17)

= $2941 + $486.15 + $886.72

= $4313.87

The overhead cost would be assigned to Product S06U using the company's activity-based costing system will be:

= ($86.50 × 43) + ($4.63 × 812) + ($52.16 × 32)

= $3719.50 + $3759.56 + $1669.12

= $9148.18

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