Russell Company manufactures two models of pens, a standard and a deluxe model.Three activities have been identified as cost drivers and the related overhead costs $60,000) pooled together to arrive at the following information: $\begin{array}{cccc}
& \begin{array}{c}
\text { Number } \
\text { of }
\end{array} & \begin{array}{c}
\text { Number } \
\text { of }
\end{array} & \begin{array}{c}
\text { Number } \
\text { of }
\end{array} \
\text { Product } & \text { Setups } & \text { Components } & \text { DLH }\\hline
\text { Standard } & 22 & 8 & 375 \
\text { Deluxe } & 28 & 12 & 225 \
& & & \
\text { Costs per pool } & \$ 15,000 & \$ 40,000 & \$ 9,000
\end{array}$ If activity?based costing is used, the cost assigned to the deluxe model using the number of components would be _____.
A)$3,600
B)$180
C)$24,000
D)$14,000

Question

Russell Company manufactures two models of pens, a standard and a deluxe model.Three activities have been identified as cost drivers and the related overhead costs $60,000) pooled together to arrive at the following information: $\begin{array}{cccc} 
& \begin{array}{c}
\text { Number } \
\text { of }
\end{array} & \begin{array}{c}
\text { Number } \
\text { of }
\end{array} & \begin{array}{c}
\text { Number } \
\text { of }
\end{array} \
\text { Product } & \text { Setups } & \text { Components } & \text { DLH }\\hline
\text { Standard } & 22 & 8 & 375 \
\text { Deluxe } & 28 & 12 & 225 \
& & & \
\text { Costs per pool } & \$ 15,000 & \$ 40,000 & \$ 9,000
\end{array}$ If activity?based costing is used, the cost assigned to the deluxe model using the number of components would be _____.
A)$3,600
B)$180
C)$24,000
D)$14,000

Quizplus · Accepted Answer

The cost assigned to the deluxe model using the number of components is calculated by dividing the total cost for the components pool ($40,000) by the total number of components (8 for Standard + 12 for Deluxe = 20) to find the cost per component, and then multiplying by the number of components used by the deluxe model (12). This calculation is: ($40,000 / 20) * 12 = $2,000 * 12 = $24,000.

Russell Company Manufactures Two Models of Pens, a Standard and a Deluxe