If the company uses activity-based costing (ABC),how much overhead cost should be assigned to Job A-15?
A)$2,120
B)$11,200
C)$1,600
D)$2,050

Question

Quizplus · Accepted Answer

To calculate the overhead cost for Job A-15, we need to use the activity-based costing (ABC) system. From the information given, we know that there are two cost pools: machining and setup. 
The machining cost pool has a total of $80,000 in overhead costs and is allocated based on machine-hours. The total machine-hours for all jobs is 500, meaning the overhead rate for machining is $160 per machine-hour ($80,000 / 500 machine-hours). 
Job A-15 required 13 machine-hours, so its overhead cost for machining is $2,080 (13 machine-hours x $160 per machine-hour).
The setup cost pool has a total of $20,000 in overhead costs and is allocated based on the number of setups. The total number of setups for all jobs is 200, making the overhead rate for setup $100 per setup ($20,000 / 200 setups). 
Job A-15 required 3 setups, so its overhead cost for setup is $300 (3 setups x $100 per setup).
Adding the overhead costs for machining and setups, the total overhead cost for Job A-15 is $2,380 ($2,080 + $300). 
Therefore, the correct answer is option A.

If the Company Uses Activity-Based Costing (ABC),how Much Overhead Cost