Ormond Corporation uses activity-based costing to assign overhead costs to products. Overhead costs have already been allocated to the company's three activity cost pools as follows: Machining, $6,800; Order Filling, $10,700; and Other, $4,500. 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:
-What is the overhead cost assigned to Product B6 under activity-based costing?
A)$442
B)$4,722
C)$11,000
D)$4,280

Question

Ormond Corporation uses activity-based costing to assign overhead costs to products. Overhead costs have already been allocated to the company's three activity cost pools as follows: Machining, $6,800; Order Filling, $10,700; and Other, $4,500. 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: 
-What is the overhead cost assigned to Product B6 under activity-based costing?
A)$442 
B)$4,722 
C)$11,000 
D)$4,280

Quizplus · Accepted Answer

Total MHs = 1,300 MHs + 18,700 MHs = 20,000 MHs
Total orders = 400 orders + 600 orders = 1,000 orders
Machining: $6,800 F1F1F1S1F1F1F10 20,000 MHs = $0.34 per MH
Order Filling: $10,700 F1F1F1S1F1F1F10 1,000 orders = $10.70 per order
Overhead cost for Product B6:
 11eaa48f_7b95_4545_9e4a_4990b78c2849_TB2485_00

Ormond Corporation Uses Activity-Based Costing to Assign Overhead Costs to Products