Munar Corporation uses activity-based costing to compute product margins.Overhead costs have already been allocated to the company's three activity cost pools-Machining, Order Filling, and Other.The costs in those activity cost pools appear below: Machining costs are assigned to products using machine-hours (MHs)and Order Filling costs are assigned to products using the number of orders.The costs in the Other activity cost pool are not assigned to products.Activity data appear below: Finally, sales and direct cost data are combined with Machining and Order Filling costs to determine product margins. What is the overhead cost assigned to Product X6 under activity-based costing?
A)$13, 500
B)$4, 698
C)$14, 130
D)$18, 828

Question

Munar Corporation uses activity-based costing to compute product margins.Overhead costs have already been allocated to the company's three activity cost pools-Machining, Order Filling, and Other.The costs in those activity cost pools appear below:  Machining costs are assigned to products using machine-hours (MHs)and Order Filling costs are assigned to products using the number of orders.The costs in the Other activity cost pool are not assigned to products.Activity data appear below:  Finally, sales and direct cost data are combined with Machining and Order Filling costs to determine product margins.  What is the overhead cost assigned to Product X6 under activity-based costing?
A)$13, 500 
B)$4, 698 
C)$14, 130 
D)$18, 828

Quizplus · Accepted Answer

Total MHs = 1, 900 MHs + 8, 100 MHs = 10, 000 MHs
Machining: $5, 800 ÷ 10, 000 MHs = $0.58 per MH
Total orders = 100 orders + 900 orders = 1, 000 orders
Order Filling: $15, 700 ÷ 1, 000 orders = $15.70 per order
Overhead cost for Product X6:
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Munar Corporation Uses Activity-Based Costing to Compute Product Margins