Wedd 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: Processing, $27,200; Supervising, $9,300; and Other, $9,500. 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 appear below: What is the overhead cost assigned to Product O6 under activity-based costing?
A) $2,325
B) $23,000
C) $14,837
D) $12,512

Question

Wedd 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: Processing, $27,200; Supervising, $9,300; and Other, $9,500. 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 appear below:  What is the overhead cost assigned to Product O6 under activity-based costing?
A) $2,325 
B) $23,000 
C) $14,837 
D) $12,512

Quizplus · Accepted Answer

Processing: $27,200 ÷ 20,000 MHs = $1.36 per MH
Supervising: $9,300 ÷ 2,000 batches = $4.65 per batch
Overhead cost for Product O6:
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Wedd Corporation Uses Activity-Based Costing to Assign Overhead Costs to Products