Manton Corporation uses an activity based costing system to assign overhead costs to products.In the first stage, two overhead costs-equipment expense and indirect labor-are allocated to the three activity cost pools-Processing, Supervising, and Other-based on resource consumption.Data to perform these allocations appear below: In the second stage, Processing costs are assigned to products using machine-hours (MHs)and Supervising costs are assigned to products using the number of batches.The costs in the Other activity cost pool are not assigned to products.Activity data for the company's two products follow: What is the overhead cost assigned to Product Z5 under activity-based costing?
A)$5, 280
B)$6, 264
C)$20, 500
D)$11, 544

Question

Manton Corporation uses an activity based costing system to assign overhead costs to products.In the first stage, two overhead costs-equipment expense and indirect labor-are allocated to the three activity cost pools-Processing, Supervising, and Other-based on resource consumption.Data to perform these allocations appear below:   In the second stage, Processing costs are assigned to products using machine-hours (MHs)and Supervising costs are assigned to products using the number of batches.The costs in the Other activity cost pool are not assigned to products.Activity data for the company's two products follow:  What is the overhead cost assigned to Product Z5 under activity-based costing?
A)$5, 280 
B)$6, 264 
C)$20, 500 
D)$11, 544

Quizplus · Accepted Answer

Assign overhead costs to products:
Processing: $21, 600 ÷ 10, 000 MHs = $2.16 per MH
Supervising: $8, 800 ÷ 1, 000 batches = $8.80 per batch
Overhead cost for Product Z5:
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Manton Corporation Uses an Activity Based Costing System to Assign