Dercole Corporation uses activity-based costing to assign overhead costs to products. Overhead costs have already been allocated to the company's three activity cost pools as follows: Machining, $43,200; Order Filling, $13,900; and Other, $14,900. 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 appear below: What is the overhead cost assigned to Product N8 under activity-based costing?
A) $4,170
B) $31,536
C) $35,706
D) $36,000

Question

Dercole Corporation uses activity-based costing to assign overhead costs to products. Overhead costs have already been allocated to the company's three activity cost pools as follows: Machining, $43,200; Order Filling, $13,900; and Other, $14,900. 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 appear below:  What is the overhead cost assigned to Product N8 under activity-based costing?
A) $4,170 
B) $31,536 
C) $35,706 
D) $36,000

Quizplus · Accepted Answer

Total MHs = 7,300 MHs + 2,700 MHs = 10,000 MHs
Total orders = 600 orders + 1,400 orders = 2,000 orders
Machining: $43,200 ÷ 10,000 MHs = $4.32 per MH
Order Filling: $13,900 ÷ 2,000 orders = $6.95 per order
Overhead cost for Product N8:
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Dercole Corporation Uses Activity-Based Costing to Assign Overhead Costs to Products