Exhibit 3-1
Hydrate Inc.makes two types of sports drinks and is implementing an activity-based costing system.Previously,all overhead had been applied on the basis of machine hours.The company produces 22,500 units of Sports Light and 42,284 units of Thirst Quench.Additional data is as follows:

-Refer to Exhibit 3-1.What is the total overhead cost applied to Thirst Quench when all overhead is applied based on machine hours?
A)$45,000
B)$617
C)$8,514
D)$2,864
E)None of the answer choices is correct.

Question

Exhibit 3-1
Hydrate Inc.makes two types of sports drinks and is implementing an activity-based costing system.Previously,all overhead had been applied on the basis of machine hours.The company produces 22,500 units of Sports Light and 42,284 units of Thirst Quench.Additional data is as follows:
 
-Refer to Exhibit 3-1.What is the total overhead cost applied to Thirst Quench when all overhead is applied based on machine hours?
A)$45,000 
B)$617 
C)$8,514 
D)$2,864 
E)None of the answer choices is correct.

Quizplus · Accepted Answer

Thirst Quench used 1,002 machine hours. The overhead rate is $8.50 per machine hour. Therefore, the total overhead cost applied to Thirst Quench is $1,002 x $8.50 = $8,514.

Exhibit 3-1 Hydrate Inc.makes Two Types of Sports Drinks and Is Implementing