Addleman Corporation has an activity-based costing system with three activity cost pools--Processing, Supervising, and Other. In the first stage allocations, costs in the two overhead accounts, equipment expense and indirect labor, are allocated to the three activity cost pools based on resource consumption. Data used in the first stage allocations follow: Distribution of Resource Consumption Across Activity Cost Pools:
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 for the company's two products follow:Activity:
Finally, the costs of Processing and Supervising are combined with the following sales and direct cost data to determine product margins.Sales and Direct Cost Data:
How much overhead cost is allocated to the Supervising activity cost pool under activity-based costing?
A) $7,300
B) $51,700
C) $7,500
D) $200

Question

Addleman Corporation has an activity-based costing system with three activity cost pools--Processing, Supervising, and Other. In the first stage allocations, costs in the two overhead accounts, equipment expense and indirect labor, are allocated to the three activity cost pools based on resource consumption. Data used in the first stage allocations follow:  Distribution of Resource Consumption Across Activity Cost Pools:
 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 for the company's two products follow:Activity:
 Finally, the costs of Processing and Supervising are combined with the following sales and direct cost data to determine product margins.Sales and Direct Cost Data:
 How much overhead cost is allocated to the Supervising activity cost pool under activity-based costing?
A) $7,300 
B) $51,700 
C) $7,500 
D) $200

Quizplus · Accepted Answer

Using the first-stage allocation percentages, we can determine the amount of overhead allocated to each cost pool:

Processing: 40% x $220,000 = $88,000
Supervising: 60% x $220,000 = $132,000
Other: Not assigned to products

Therefore, $132,000 is allocated to the Supervising activity cost pool.

Addleman Corporation Has an Activity-Based Costing System with Three Activity