Mciver 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, $10, 900;Order Filling, $10, 500;and Other, $75, 600.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 K0 under activity-based costing?
A)$1, 635
B)$6, 300
C)$48, 500
D)$7, 935

Question

Mciver 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, $10, 900;Order Filling, $10, 500;and Other, $75, 600.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 K0 under activity-based costing?
A)$1, 635 
B)$6, 300 
C)$48, 500 
D)$7, 935

Quizplus · Accepted Answer

Total MHs = 1, 500 MHs + 8, 500 MHs = 10, 000 MHs
Total orders = 600 orders + 400 orders = 1, 000 orders
Machining: $10, 900 ÷ 10, 000 MHs = $1.09 per MH
Order Filling: $10, 500 ÷ 1, 000 orders = $10.50 per order
Overhead cost for Product K0:
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Mciver Corporation Uses Activity-Based Costing to Assign Overhead Costs to Products.Overhead