Boswell Company manufactures two products, Regular and Supreme. Boswell's overhead costs consist of machining, $3,000,000; and assembling, $1,500,000. Information on the two products is: $$\begin{array} { l c c }
& \text { Regular } & \text { Supreme } \
\text { Direct labor hours }& 10,000 & 15,000 \
\text { Machine hours } & 10,000 & 30,000 \
\text { Number of parts } & 90,000 & 160,000
\end{array}$$ Overhead applied to Regular using activity-based costing is
A) $1,290,000.
B) $1,800,000.
C) $2,700,000.
D) $3,210,000.

Question

Boswell Company manufactures two products, Regular and Supreme. Boswell's overhead costs consist of machining, $3,000,000; and assembling, $1,500,000. Information on the two products is: $$\begin{array} { l c c } 
 & \text { Regular } & \text { Supreme } \
\text { Direct labor hours }& 10,000 & 15,000 \
\text { Machine hours } & 10,000 & 30,000 \
\text { Number of parts } & 90,000 & 160,000
\end{array}$$ Overhead applied to Regular using activity-based costing is
A) $1,290,000.
B) $1,800,000.
C) $2,700,000.
D) $3,210,000.

Quizplus · Accepted Answer

To calculate the overhead applied to Regular using activity-based costing (ABC), we first need to determine the cost drivers for each overhead activity. Here, machining costs are driven by machine hours, and assembling costs are driven by the number of parts. 1. Calculate the overhead rates:- Machining overhead rate = Total machining costs / Total machine hours = $3,000,000 / (10,000 + 30,000) = $75 per machine hour.- Assembling overhead rate = Total assembling costs / Total number of parts = $1,500,000 / (90,000 + 160,000) = $6 per part.2. Apply the overhead rates to Regular:- Machining overhead for Regular = Machining overhead rate * Regular's machine hours = $75 * 10,000 = $750,000.- Assembling overhead for Regular = Assembling overhead rate * Regular's number of parts = $6 * 90,000 = $540,000.3. Total overhead applied to Regular = Machining overhead for Regular + Assembling overhead for Regular = $750,000 + $540,000 = $1,290,000.

Boswell Company Manufactures Two Products, Regular and Supreme Overhead Applied to Regular Using Activity-Based Costing Is A) $1,290,000

Boswell Company Manufactures Two Products, Regular and Supreme Overhead Applied to Regular Using Activity-Based Costing Is
A) $1,290,000