Dawson Company manufactures two products,Regular and Deluxe.Overhead costs consist of machining,$2,500,000; and assembly,$1,250,000.Recent data are provided below: Regular Deluxe
Direct labor hours 10,000 15,000
Machine hours 10,000 30,000
Number of parts 90,000 160,000
Overhead allocated to Deluxe using a single overhead rate based on number of parts and using activity based costing,respectively,are:
A)$2,400,000 and $2,625,000
B)$937,500 and $2,812,500
C)$1,350,000 and $1,125,000
D)$1,075,000 and $2,675,000

Question

Quizplus · Accepted Answer

Overhead allocated to Deluxe using a single overhead rate based on number of parts is: $1,250,000 x (160,000 / 250,000) = $625,000Overhead allocated to Deluxe using activity based costing is:Machining: $2,500,000 x (30,000 / 40,000) = $1,875,000Assembly: $1,250,000 x (15,000 / 25,000) = $750,000Total: $1,875,000 + $750,000 = $2,625,000

Dawson Company Manufactures Two Products,Regular and Deluxe