Kenrick Corporation uses activity-based costing to compute product margins.In the first stage, the activity-based costing system allocates two overhead accounts-equipment expense and indirect labor-to three activity cost pools-Processing, Supervising, and Other-based on resource consumption.Data to perform these allocations appear below: In the second stage, 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: Finally, sales and direct cost data are combined with Processing and Supervising costs to determine product margins. How much overhead cost is allocated to the Processing activity cost pool under activity-based costing in the first stage of allocation?
A)$2, 400
B)$600
C)$1, 800
D)$11, 400

Question

Kenrick Corporation uses activity-based costing to compute product margins.In the first stage, the activity-based costing system allocates two overhead accounts-equipment expense and indirect labor-to three activity cost pools-Processing, Supervising, and Other-based on resource consumption.Data to perform these allocations appear below:   In the second stage, 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:  Finally, sales and direct cost data are combined with Processing and Supervising costs to determine product margins.  How much overhead cost is allocated to the Processing activity cost pool under activity-based costing in the first stage of allocation?
A)$2, 400 
B)$600 
C)$1, 800 
D)$11, 400

Quizplus · Accepted Answer

Assign overhead costs to activity cost pools by applying the percentages in the Distribution of Resource Consumption Across Activity Cost Pools table to the respective costs.For example, the first entry in the table is computed as follows: $18, 000 × 0.10 = $1, 800.
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Kenrick Corporation Uses Activity-Based Costing to Compute Product Margins