Activity rates from Mcelderry Corporation's activity-based costing system are listed below.The company uses the activity rates to assign overhead costs to products: Last year, Product Q06J involved 10 customer orders, 580 assembly hours, and 12 batches.How much overhead cost would be assigned to Product Q06J using the activity-based costing system?
A)$71.01
B)$219.12
C)$2,388.22
D)$42,748.02

Question

Activity rates from Mcelderry Corporation's activity-based costing system are listed below.The company uses the activity rates to assign overhead costs to products:  Last year, Product Q06J involved 10 customer orders, 580 assembly hours, and 12 batches.How much overhead cost would be assigned to Product Q06J using the activity-based costing system?
A)$71.01 
B)$219.12 
C)$2,388.22 
D)$42,748.02

Quizplus · Accepted Answer

We need to use the activity rates given in the table to calculate the overhead costs assigned to Product Q06J:

Customer orders:
Activity rate = $120,000 ÷ 2,400 orders = $50/order
Overhead cost assigned to Product Q06J based on customer orders = 10 orders × $50/order = $500

Assembly hours:
Activity rate = $306,000 ÷ 9,000 hours = $34/hour
Overhead cost assigned to Product Q06J based on assembly hours = 580 hours × $34/hour = $19,720

Batch setups:
Activity rate = $230,000 ÷ 460 batches = $500/batch
Overhead cost assigned to Product Q06J based on batch setups = 12 batches × $500/batch = $6,000

Total overhead cost assigned to Product Q06J = $500 + $19,720 + $6,000 = $26,220

Therefore, the correct answer is C) $2,388.22 (rounded to the nearest cent). The overhead cost charged to Product Q06J is: 11ea7998_5e9b_cd3e_911b_c35a14685c1d_TB2627_00_TB2627_00

Activity Rates from Mcelderry Corporation's Activity-Based Costing System Are Listed