Boswell Company manufactures two products, Regular and Supreme.Boswell's overhead costs consist of machining, $3,000,000; and assembling, $1,500,000.Information on the two products is: $$\begin{array} { l c r }
& \text { Reqular } & \text { Supreme } \
\text { Direct labor hours } & 10,000 & 15,000 \
\text { Machine hours } & 10,000 & 30,000 \
\text { Number of parts } & 90,000 & 160,000
\end{array}$$ Overhead applied to Regular using activity-based costing is

Question

Boswell Company manufactures two products, Regular and Supreme.Boswell's overhead costs consist of machining, $3,000,000; and assembling, $1,500,000.Information on the two products is: $$\begin{array} { l c r } 
& \text { Reqular } & \text { Supreme } \
\text { Direct labor hours } & 10,000 & 15,000 \
\text { Machine hours } & 10,000 & 30,000 \
\text { Number of parts } & 90,000 & 160,000
\end{array}$$ Overhead applied to Regular using activity-based costing is

Quizplus · Accepted Answer

Activity-based costing allocates overhead based on activities. Machining costs are allocated based on machine hours, and assembling costs are allocated based on the number of parts. Regular uses 10,000 machine hours and 90,000 parts. The machining cost per machine hour is $3,000,000 / (10,000 + 30,000) = $75. The assembling cost per part is $1,500,000 / (90,000 + 160,000) = $6. Regular's overhead is (10,000 * $75) + (90,000 * $6) = $750,000 + $540,000 = $1,290,000.

Boswell Company Manufactures Two Products, Regular and Supreme Overhead Applied to Regular Using Activity-Based Costing Is A)$1,290,000

Boswell Company Manufactures Two Products, Regular and Supreme Overhead Applied to Regular Using Activity-Based Costing Is
A)$1,290,000