Clinton Company manufactures two models of pens-a standard and a deluxe model. Three activities have been identified as cost drivers and the related overhead costs ($60,000) pooled together to arrive at the following information: $$\begin{array} { l l l l }
\text { Product } & \begin{array} { l }
\text { Number of } \
\text { Setups }
\end{array} & \begin{array} { l }
\text { Number of } \
\text { Components }
\end{array} & \begin{array} { l }
\text { Number of } \
\text { DLH }
\end{array} \
\text { Standard } & 22 & 8 & 375 \
\text { Deluxe } & 28 & 12 & 225 \
\text { Costs per pool } & \$ 15,000 & \$ 36,000 & \$ 9,000
\end{array}$$ is the total amount of overhead costs assigned to the standard model assuming activity- based costing is used.
A) $37,500
B) $26,625
C) $33,375
D) $22,500

Question

Clinton Company manufactures two models of pens-a standard and a deluxe model. Three activities have been identified as cost drivers and the related overhead costs ($60,000) pooled together to arrive at the following information: $$\begin{array} { l l l l } 
\text { Product } & \begin{array} { l } 
\text { Number of } \
\text { Setups }
\end{array} & \begin{array} { l } 
\text { Number of } \
\text { Components }
\end{array} & \begin{array} { l } 
\text { Number of } \
\text { DLH }
\end{array} \
\text { Standard } & 22 & 8 & 375 \
\text { Deluxe } & 28 & 12 & 225 \
\text { Costs per pool } & \$ 15,000 & \$ 36,000 & \$ 9,000
\end{array}$$ is the total amount of overhead costs assigned to the standard model assuming activity- based costing is used.
A) $37,500
B) $26,625
C) $33,375
D) $22,500

Quizplus · Accepted Answer

The overhead costs are allocated based on the proportion of each activity used by the standard model. For setups: (22/50) * $15,000 = $6,600. For components: (8/20) * $36,000 = $14,400. For DLH: (375/600) * $9,000 = $5,625. Total = $6,600 + $14,400 + $5,625 = $26,625.

Clinton Company Manufactures Two Models of Pens-A Standard and a Deluxe