Bachrodt Corporation uses activity-based costing to compute product margins. Overhead costs have already been allocated to the company's three activity cost pools--Processing, Supervising, and Other. The costs in those activity cost pools appear below: 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
Finally, sales and direct cost data are combined with Processing and Supervising costs to determine product margins.
What is the overhead cost assigned to Product Y7 under activity-based costing?
A) $7,992
B) $1,480
C) $18,000
D) $9,472

Question

Bachrodt Corporation uses activity-based costing to compute product margins. Overhead costs have already been allocated to the company's three activity cost pools--Processing, Supervising, and Other. The costs in those activity cost pools appear below:  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
 Finally, sales and direct cost data are combined with Processing and Supervising costs to determine product margins.
 What is the overhead cost assigned to Product Y7 under activity-based costing?
A) $7,992 
B) $1,480 
C) $18,000 
D) $9,472

Quizplus · Accepted Answer

Assign overhead costs to products:
Processing: $21,600 ÷ 10,000 MHs = $2.16 per MH
Supervising: $3,700 ÷ 1,000 batches = $3.70 per batch
Overhead cost for Product Y7:
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Bachrodt Corporation Uses Activity-Based Costing to Compute Product Margins