Vontungeln 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. How much overhead cost is allocated to the Machining activity cost pool under activity-based costing in the first stage of allocation?
A)$32, 000
B)$16, 000
C)$400
D)$32, 400

Question

Vontungeln 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.  How much overhead cost is allocated to the Machining activity cost pool under activity-based costing in the first stage of allocation?
A)$32, 000 
B)$16, 000 
C)$400 
D)$32, 400

Quizplus · Accepted Answer

Assign overhead costs to activity cost pools by applying the percentages in the Distribution of Resource Consumption Across Activity Cost Pools table to the respective costs.For example, the first entry in the table is computed as follows: $64, 000 × 0.50 = $32, 000.
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Vontungeln Corporation Uses Activity-Based Costing to Compute Product Margins