Zimmerman Company manufactures two products, Board 12 and Case 165. Zimmerman's overhead costs consist of setting up machines, $2,400,000; machining, $5,400,000; and inspecting, $1,800,000. Information on the two products is: $\begin{array}{lrr}&\text { Board } 12& \text { Case } 165\
\text { Direct labor hours } & 15,000 & 25,000 \
\text { Machine setups } & 600 & 400 \
\text { Machine hours } & 24,000 & 26,000 \
\text { Inspections } & 800 & 700
\end{array}$ Overhead applied to Case 165 using activity-based costing is

Question

Quizplus · Accepted Answer

Activity-based costing allocates overhead based on activities. For Case 165:  - Machine setups: (400/1000) * $2,400,000 = $960,000  - Machining: (26,000/50,000) * $5,400,000 = $2,808,000  - Inspections: (700/1500) * $1,800,000 = $840,000  Total overhead for Case 165 = $960,000 + $2,808,000 + $840,000 = $4,608,000.

Zimmerman Company Manufactures Two Products, Board 12 and Case 165