Morrow Co.produces 3 products: Beta,Delta,and Gamma.Beta requires 400 purchase orders,Delta requires 600 purchase orders,and Gamma requires 1,000 purchase orders.Morrow has identified an ordering and receiving activity cost pool with allocated overhead of $180,000 for which the cost driver is purchase orders.Direct labor hours used on each product are 50,000 for Beta,40,000 for Delta,and 110,000 for Gamma.How much ordering and receiving overhead is assigned to each product? Beta Delta Gamma
A)$60,000 $60,000 $60,000
B)$45,000 $36,000 $99,000
C)$36,000 $54,000 $90,000
D)$40,500 $45,000 $94,500

Question

Quizplus · Accepted Answer

The cost driver for the ordering and receiving activity cost pool is purchase orders. Therefore, we need to allocate the $180,000 overhead based on the number of purchase orders for each product.
The allocation rates are as follows:
- Beta: $180,000 / 400 = $450 per purchase order
- Delta: $180,000 / 600 = $300 per purchase order
- Gamma: $180,000 / 1,000 = $180 per purchase order

To allocate the ordering and receiving overhead to each product, we need to multiply the allocation rate by the number of purchase orders for each product, as follows:
- Beta: $450 x 400 = $180,000
- Delta: $300 x 600 = $180,000
- Gamma: $180 x 1,000 = $180,000

Therefore, the ordering and receiving overhead assigned to each product is:
- Beta: $180,000
- Delta: $180,000
- Gamma: $180,000

The correct answer is B.

Morrow CoProduces 3 Products: Beta,Delta,and Gamma