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. What is the overhead cost assigned to Product I6 under activity-based costing?
A)$11, 760
B)$24, 072
C)$34, 000
D)$12, 312

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.  What is the overhead cost assigned to Product I6 under activity-based costing?
A)$11, 760 
B)$24, 072 
C)$34, 000 
D)$12, 312

Quizplus · Accepted Answer

Assign overhead costs to products:
Machining: $32, 400 ÷ 20, 000 MHs = $1.62 per MH
Order Filling: $19, 600 ÷ 1, 000 orders = $19.60 per order
Overhead cost for Product I6:
 11eaa0c8_957b_4b0f_9cb2_35f98b781a18_TB2487_00

Vontungeln Corporation Uses Activity-Based Costing to Compute Product Margins