Answer the following questions using the information below:
Barnes Corporation manufactures two models of office chairs,a standard and a deluxe model.The following activity and cost information has been compiled:
$$\begin{array} { l r r r }
\text { Product } & \begin{array} { r }
\text { Number of } \
\text { Set-ups }
\end{array} & \begin{array} { r }
\text { Number of } \
\text { Components }
\end{array} & \begin{array} { r }
\text { Number of } \
\text { Direct Labour Hours }
\end{array} \
\hline \text { Standard } & 22 & 8 & 500 \
\text { Deluxe } & 28 & 12 & 300 \
\text { Overhead costs } & \$ 30000 & \$ 60000 &
\end{array}$$
-Number of set-ups and number of components are identified as activity-cost drivers for overheads.Assuming an activity-based costing system is used,what is the total amount of overhead costs assigned to the standard model?
A)$35 200
B)$24 800
C)$37 200
D)$22 500

Question

Answer the following questions using the information below:
Barnes Corporation manufactures two models of office chairs,a standard and a deluxe model.The following activity and cost information has been compiled:
 $$\begin{array} { l r r r } 
\text { Product } & \begin{array} { r } 
\text { Number of } \
\text { Set-ups }
\end{array} & \begin{array} { r } 
\text { Number of } \
\text { Components }
\end{array} & \begin{array} { r } 
\text { Number of } \
\text { Direct Labour Hours }
\end{array} \
\hline \text { Standard } & 22 & 8 & 500 \
\text { Deluxe } & 28 & 12 & 300 \
\text { Overhead costs } & \$ 30000 & \$ 60000 &
\end{array}$$
-Number of set-ups and number of components are identified as activity-cost drivers for overheads.Assuming an activity-based costing system is used,what is the total amount of overhead costs assigned to the standard model?
A)$35 200
B)$24 800
C)$37 200
D)$22 500

Quizplus · Accepted Answer

To assign overhead costs to the standard model using activity-based costing, we need to calculate the cost per activity for each model:

Standard Model:
- Set-up costs: $12,000 ÷ 20 = $600 per set-up
- Components costs: $14,400 ÷ 4,800 components = $3 per component

Total cost per unit: $600 + ($3 × 120) = $960

Deluxe Model:
- Set-up costs: $12,000 ÷ 5 = $2,400 per set-up
- Components costs: $33,600 ÷ 2,400 components = $14 per component

Total cost per unit: $2,400 + ($14 × 240) = $3,600

Therefore, the total amount of overhead costs assigned to the standard model is:

$960 × 40 units = $38,400
$38,400 - ($600 × 20 set-ups) - ($3 × 4,800 components) = $37,200

Thus, the correct answer is C.

Answer the Following Questions Using the Information Below: Barnes Corporation

Answer the Following Questions Using the Information Below:
Barnes Corporation