Goold Corporation uses activity-based costing to compute product margins. Overhead costs have already been allocated to the company's three activity cost pools-Machining, Order Filling, and Other. The costs in those activity cost pools appear below: 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. Activity data appear below: 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 R9 under activity-based costing?
A)$624
B)$2,660
C)$8,000
D)$3,284

Question

Goold Corporation uses activity-based costing to compute product margins. Overhead costs have already been allocated to the company's three activity cost pools-Machining, Order Filling, and Other. The costs in those activity cost pools appear below: 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. Activity data appear below: 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 R9 under activity-based costing?
A)$624 
B)$2,660 
C)$8,000 
D)$3,284

Quizplus · Accepted Answer

Assign overhead costs to products:
Total MHs = 3,900 MHs + 16,100 MHs = 20,000 MHs
Machining: $3,200 F1F1F1S1F1F1F10 20,000 MHs = $0.16 per MH
Total orders = 700 orders + 1,300 orders = 2,000 orders
Order Filling: $7,600 F1F1F1S1F1F1F10 2,000 orders = $3.80 per order
Overhead cost for Product R9:
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Goold Corporation Uses Activity-Based Costing to Compute Product Margins