Koutz Corporation uses activity-based costing to compute product margins.Overhead costs have already been allocated to the company's three activity cost pools-Processing, Supervising, and Other.The costs in those activity cost pools appear below: 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 appear below: Finally, sales and direct cost data are combined with Processing and Supervising costs to determine product margins. What is the overhead cost assigned to Product O7 under activity-based costing?
A)$32, 129
B)$36, 289
C)$4, 160
D)$47, 000

Question

Koutz Corporation uses activity-based costing to compute product margins.Overhead costs have already been allocated to the company's three activity cost pools-Processing, Supervising, and Other.The costs in those activity cost pools appear below:  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 appear below:  Finally, sales and direct cost data are combined with Processing and Supervising costs to determine product margins.  What is the overhead cost assigned to Product O7 under activity-based costing?
A)$32, 129 
B)$36, 289 
C)$4, 160 
D)$47, 000

Quizplus · Accepted Answer

Assign overhead costs to products:
Processing: $36, 100 ÷ 10, 000 MHs = $3.61 per MH
Supervising: $10, 400 ÷ 2, 000 batches = $5.20 per batch
Overhead cost for Product O7:
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Koutz Corporation Uses Activity-Based Costing to Compute Product Margins