Polk 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: $\begin{array}{cccc}
& \begin{array}{c}
\text { Number } \
\text { of }
\end{array} & \begin{array}{c}
\text { Number } \
\text { of }
\end{array} & \begin{array}{c}
\text { Number } \
\text { of }
\end{array} \
\text { Product } & \text { Setups } & \text { Components } & \text { DLH }\\hline
\text { Standard } & 22 & 8 & 375 \
\text { Deluxe } & 28 & 12 & 225 \
& & & \
\text { Costs per pool } & \$ 15,000 & \$ 36,000 & \$ 9,000
\end{array}$ _____ is the total amount of overhead costs assigned to the deluxe model assuming activity-based costing is used.
A)$26,625
B)$33,375
C)$37,500
D)$22,500

Question

Polk 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: $\begin{array}{cccc} 
& \begin{array}{c}
\text { Number } \
\text { of }
\end{array} & \begin{array}{c}
\text { Number } \
\text { of }
\end{array} & \begin{array}{c}
\text { Number } \
\text { of }
\end{array} \
\text { Product } & \text { Setups } & \text { Components } & \text { DLH }\\hline
\text { Standard } & 22 & 8 & 375 \
\text { Deluxe } & 28 & 12 & 225 \
& & & \
\text { Costs per pool } & \$ 15,000 & \$ 36,000 & \$ 9,000
\end{array}$ _____ is the total amount of overhead costs assigned to the deluxe model assuming activity-based costing is used.
A)$26,625
B)$33,375
C)$37,500
D)$22,500

Quizplus · Accepted Answer

The total overhead costs assigned to the deluxe model using activity-based costing (ABC) can be calculated by allocating the costs from each cost pool based on the activity levels for the deluxe model. 1. For setups: - Total setups = 22 (Standard) + 28 (Deluxe) = 50 setups- Cost per setup = $15,000 / 50 = $300 per setup- Deluxe model setups cost = 28 setups * $300 = $8,4002. For components: - Total components = 8 (Standard) + 12 (Deluxe) = 20 components- Cost per component = $36,000 / 20 = $1,800 per component- Deluxe model components cost = 12 components * $1,800 = $21,6003. For direct labor hours (DLH): - Total DLH = 375 (Standard) + 225 (Deluxe) = 600 DLH- Cost per DLH = $9,000 / 600 = $15 per DLH- Deluxe model DLH cost = 225 DLH * $15 = $3,375Adding these costs together gives the total overhead costs assigned to the deluxe model:- Total = $8,400 (setups) + $21,600 (components) + $3,375 (DLH) = $33,375

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