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: $$\begin{array} { l r r }
& \text { Board 12 } & \text { Case 165 } \
\text { Direct labor hours } & 15,000 & 25,000 \
\text { Machine setups } & 600 & 400 \
\text { Machine hours } & 24,000 & 26,000 \
\text { Inspections } & 800 & 700
\end{array}$$ Overhead applied to Board 12 using activity-based costing is

Question

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: $$\begin{array} { l r r } 
& \text { Board 12 } & \text { Case 165 } \
\text { Direct labor hours } & 15,000 & 25,000 \
\text { Machine setups } & 600 & 400 \
\text { Machine hours } & 24,000 & 26,000 \
\text { Inspections } & 800 & 700
\end{array}$$ Overhead applied to Board 12 using activity-based costing is

Quizplus · Accepted Answer

Overhead applied to Board 12 using activity-based costing is $4,992,000. Overhead rate for setting up machines = $2,400,000 / 1,000 setups = $2,400 per setupOverhead rate for machining = $5,400,000 / 50,000 machine hours = $108 per machine hourOverhead rate for inspecting = $1,800,000 / 1,500 inspections = $1,200 per inspectionOverhead applied to Board 12 = (600 setups x $2,400 per setup) + (24,000 machine hours x $108 per machine hour) + (800 inspections x $1,200 per inspection) = $4,992,000

Zimmerman Company Manufactures Two Products, Board 12 and Case 165