A company uses activity-based costing to determine the costs of its three products: A, B, and C. The budgeted cost and activity for each of the company's three activity cost pools are shown in the following table: How much overhead will be assigned to Product B using activity-based costing?
A) $56,500
B) $78,000
C) $62,500
D) $197,000
E) $70,000

Question

A company uses activity-based costing to determine the costs of its three products: A, B, and C. The budgeted cost and activity for each of the company's three activity cost pools are shown in the following table:  How much overhead will be assigned to Product B using activity-based costing?
A) $56,500 
B) $78,000 
C) $62,500 
D) $197,000 
E) $70,000

Quizplus · Accepted Answer

$70,000/(6,000 + 9,000 + 20,000) = $2.00
$45,000/(7,000 + 15,000 + 8,000) = $1.50
$82,000/(2,500 + 1,000 + 1,625) = $16.00
(9,000 × $2.00) + (15,000 × $1.50) + (1,000 × $16.00) = $56,500

A Company Uses Activity-Based Costing to Determine the Costs of Its