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2 June, 09:36

Angara Corporation uses activity-based costing to determine product costs for external financial reports. The company has provided the following data concerning its activity-based costing system:

Activities (and Activity Measures) Estimated Overhead Cost

Machine related (machine-hours) $362,600

Batch setup (setups) $421,500

General factory (direct labour-hours) $308,100

Expected Activity

Activities Product X Product Y Total

Machine related 6,000 8,000 14,000

Batch setup 12,000 3,000 15,000

General factory 5,000 8,000 13,000

Assuming that actual activity turns out to be the same as expected activity, the total amount of overhead cost allocated to Product X would be closest to:

a. $421,500

b. $897,500

c. $476,000

d. $611,100

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Answers (1)
  1. 2 June, 09:48
    0
    d. $611,100

    Explanation:

    The computation of the total amount of overhead cost is shown below:

    = (Machine related cost : Total machine related cost of product X * Machine related of product X) + (Batch setup cost : Total machine related cost of product X * Machine related of product X) + (General factory cost : total general factory cost of product X * general factory of product X)

    = ($362,600 : 14,000 * 6,000) + ($421,500 : 15,000 * 12,000) + ($308,100 : 13,000 * 5,000)

    = $155,400 + $337,200 + $118,500

    = $611,100
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