Cleveland Choppers manufactures two types of motorcycles, a Base and a Loaded model. The following activity and costs have been gathered: The number of components and number of setups are chosen as activity-cost drivers for overhead. Assuming an ABC costing system is being used, what is the total overhead cost assigned to the Base model?
A) $15,450.
B) $21,375.
C) $13,500.
D) $17,625.
E) $15,625.

Question

Cleveland Choppers manufactures two types of motorcycles, a Base and a Loaded model. The following activity and costs have been gathered:  The number of components and number of setups are chosen as activity-cost drivers for overhead. Assuming an ABC costing system is being used, what is the total overhead cost assigned to the Base model?
A) $15,450. 
B) $21,375. 
C) $13,500. 
D) $17,625. 
E) $15,625.

Quizplus · Accepted Answer

Setups: $22,500/(20 + 40) = $375
Components: $27,000/(15 + 25) = $675
Total overhead cost (Base) = ($375 × 20) + ($675 × 15) = $17,625

Cleveland Choppers Manufactures Two Types of Motorcycles, a Base and a Loaded