Schwering 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, $20, 800;Order Filling, $30, 400;and Other, $48, 800.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 U1 under activity-based costing?
A)$20, 016
B)$50, 000
C)$6, 080
D)$13, 936

Question

Schwering 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, $20, 800;Order Filling, $30, 400;and Other, $48, 800.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 U1 under activity-based costing?
A)$20, 016 
B)$50, 000 
C)$6, 080 
D)$13, 936

Quizplus · Accepted Answer

Total MHs = 6, 600 MHs + 13, 400 MHs = 20, 000 MHs
Machining: $20, 800 ÷ 20, 000 MHs = $1.04 per MH
Total orders = 800 orders + 200 orders = 1, 000 orders
Order Filling: $30, 400 ÷ 1, 000 orders = $30.40 per order
Overhead cost for Product U1:
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Schwering Corporation Uses Activity-Based Costing to Assign Overhead Costs to Products.Overhead