Dartmouth Corporation manufactures two models of office chairs, a standard and a deluxe model. The following activity and cost information has been compiled:

Number of setups and number of components are identified as activity-cost drivers for overhead. Assuming an activity-based costing system is used, what is the total amount of overhead costs assigned to the deluxe model?
A) $59,450
B) $83,800
C) $56,800
D) $62,100

Question

Dartmouth Corporation manufactures two models of office chairs, a standard and a deluxe model. The following activity and cost information has been compiled:

Number of setups and number of components are identified as activity-cost drivers for overhead. Assuming an activity-based costing system is used, what is the total amount of overhead costs assigned to the deluxe model?
A) $59,450 
B) $83,800 
C) $56,800 
D) $62,100

Quizplus · Accepted Answer

Setups: $60,000 ÷ (11 + 29) = $1,500
Components: $58,900 ÷ (6 + 13) = $3,100
Total amount of overhead costs = ($1,500 × 29) + ($3,100 × 13) = $83,800

Dartmouth Corporation Manufactures Two Models of Office Chairs, a Standard