Mirabile Corporation uses activity-based costing to compute product margins. Overhead costs have already been allocated to the company's three activity cost pools--Processing, Supervising, and Other. The costs in those activity cost pools appear below: Processing costs are assigned to products using machine-hours (MHs) and Supervising costs are assigned to products using the number of batches. The costs in the Other activity cost pool are not assigned to products. Activity data appear below:
Finally, sales and direct cost data are combined with Processing and Supervising costs to determine product margins.
What is the overhead cost assigned to Product M5 under activity-based costing?
A) $11,900
B) $19,000
C) $114
D) $12,014

Question

Mirabile Corporation uses activity-based costing to compute product margins. Overhead costs have already been allocated to the company's three activity cost pools--Processing, Supervising, and Other. The costs in those activity cost pools appear below:  Processing costs are assigned to products using machine-hours (MHs) and Supervising costs are assigned to products using the number of batches. The costs in the Other activity cost pool are not assigned to products. Activity data appear below:
 Finally, sales and direct cost data are combined with Processing and Supervising costs to determine product margins.
 What is the overhead cost assigned to Product M5 under activity-based costing?
A) $11,900 
B) $19,000 
C) $114 
D) $12,014

Quizplus · Accepted Answer

Processing: $3,800 ÷ 10,000 MHs = $0.38 per MH
Supervising: $23,800 ÷ 1,000 batches = $23.80 per batch
Overhead cost for Product M5:
 11eacbfc_c68b_0ca7_8ffe_7713bfd299ec_TB7552_00

Mirabile Corporation Uses Activity-Based Costing to Compute Product Margins