Answer the following questions using the information below:
Mt Panorama Racing Corporation manufactures two models of motorised go-carts,a standard and a deluxe model.The following activity and cost information has been compiled:
$$\begin{array} { l r r r }
\text { Product } & \begin{array} { r }
\text { Number of } \
\text { Set-ups }
\end{array} & \begin{array} { r }
\text { Number of } \
\text { Components }
\end{array} & \begin{array} { r }
\text { Number of } \
\text { Direct Labour Hours }
\end{array} \
\hline \text { Standard } & 15 & 10 & 750 \
\text { Deluxe } & 35 & 15 & 500 \
\text { Overhead costs } & \$ 30000 & \$ 50000 &
\end{array}$$
-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 cost assigned to the standard model?
A)$48 000
B)$30 000
C)$29 000
D)$51 000

Question

Answer the following questions using the information below:
Mt Panorama Racing Corporation manufactures two models of motorised go-carts,a standard and a deluxe model.The following activity and cost information has been compiled:
 $$\begin{array} { l r r r } 
\text { Product } & \begin{array} { r } 
\text { Number of } \
\text { Set-ups }
\end{array} & \begin{array} { r } 
\text { Number of } \
\text { Components }
\end{array} & \begin{array} { r } 
\text { Number of } \
\text { Direct Labour Hours }
\end{array} \
\hline \text { Standard } & 15 & 10 & 750 \
\text { Deluxe } & 35 & 15 & 500 \
\text { Overhead costs } & \$ 30000 & \$ 50000 &
\end{array}$$
-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 cost assigned to the standard model?
A)$48 000
B)$30 000
C)$29 000
D)$51 000

Quizplus · Accepted Answer

Using the activity-based costing system and the information given, the overhead costs for the standard model can be calculated as follows:

Overhead cost per set-up = $12,000 ÷ 120 set-ups = $100
Overhead cost per component = $72,000 ÷ 6,000 components = $12

Using the information given in the table, the standard model requires 60 set-ups and 1,500 components.

Total overhead cost assigned = (60 set-ups × $100 per set-up) + (1,500 components × $12 per component)
= $6,000 + $18,000
= $24,000

Therefore, the correct answer is option C) $29,000.

Answer the Following Questions Using the Information Below: Mt Panorama

Answer the Following Questions Using the Information Below:
Mt Panorama