Boswell Company manufactures two products, Regular and Supreme. Boswell's overhead costs consist of machining, $3,000,000; and assembling, $1,500,000. Information on the two products is: $\begin{array}{lrr}&\text { Regular}&\text { Supreme }
\text { Direct labor hours } & 10,000 & 15,000 \
\text { Machine hours } & 10,000 & 30,000 \
\text { Number of parts } & 90,000 & 160,000
\end{array}$ Overhead applied to Regular using activity-based costing is
A)$1,290,000.
B)$1,800,000.
C)$2,700,000.
D)$3,210,000.

Question

Quizplus · Accepted Answer

Activity-based costing allocates overhead based on activities. Machining costs are allocated based on machine hours, and assembling costs are allocated based on the number of parts. Regular uses 10,000 machine hours and 90,000 parts. Machining cost per machine hour is $3,000,000/40,000 = $75. Assembling cost per part is $1,500,000/250,000 = $6. Overhead for Regular is (10,000 * $75) + (90,000 * $6) = $750,000 + $540,000 = $1,290,000.

Boswell Company Manufactures Two Products, Regular and Supreme Overhead Applied to Regular Using Activity-Based Costing Is A)$1,290,000

Boswell Company Manufactures Two Products, Regular and Supreme Overhead Applied to Regular Using Activity-Based Costing Is
A)$1,290,000