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 Case 165 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 Case 165 using activity-based costing is

Quizplus · Accepted Answer

Using activity-based costing, overhead is allocated based on activities. For Case 165, calculate the overhead for each activity:  - 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