Brisky Corporation uses activity-based costing to compute product margins. In the first stage, the activity-based costing system allocates two overhead accounts-equipment depreciation and supervisory expense-to three activity cost pools-Machining, Order Filling, and Other-based on resource consumption. Data to perform these allocations appear below: In the second stage, Machining costs are assigned to products using machine-hours (MHs) and Order Filling costs are assigned to products using the number of orders. The costs in the Other activity cost pool are not assigned to products. Finally, sales and direct cost data are combined with Machining and Order Filling costs to determine product margins.

-What is the overhead cost assigned to Product I3 under activity-based costing?
A)$3,780
B)$14,000
C)$4,560
D)$780

Question

Brisky Corporation uses activity-based costing to compute product margins. In the first stage, the activity-based costing system allocates two overhead accounts-equipment depreciation and supervisory expense-to three activity cost pools-Machining, Order Filling, and Other-based on resource consumption. Data to perform these allocations appear below:

In the second stage, Machining costs are assigned to products using machine-hours (MHs) and Order Filling costs are assigned to products using the number of orders. The costs in the Other activity cost pool are not assigned to products.

Finally, sales and direct cost data are combined with Machining and Order Filling costs to determine product margins.

-What is the overhead cost assigned to Product I3 under activity-based costing?

-What is the overhead cost assigned to Product I3 under activity-based costing?
A)$3,780 
B)$14,000 
C)$4,560 
D)$780

Quizplus · Accepted Answer

Assign overhead costs to products:
Machining: $14,000 F1F1F1S1F1F1F10 20,000 MHs = $0.70 per MH
Order Filling: $7,800 F1F1F1S1F1F1F10 1,000 orders = $7.80 per order
Overhead cost for Product I3:
 11eaa48f_7b94_33cd_9e4a_8313c00173f1_TB2485_00

Brisky Corporation Uses Activity-Based Costing to Compute Product Margins