Addison Company manufactures two products, Regular and Supreme.Addison's overhead costs consist of machining, $2,500,000; and assembling, $1,250,000.Information on the two products is: $$\begin{array} { l c c }
& \text { Regular } & \text { Supreme } \
\text { Direct labor hours } & 10,000 & 15,000 \
\text { Machine hours } & 10,000 & 30,000 \
\text { Number of parts } & 90,000 & 160,000
\end{array}$$
- Overhead applied to Regular using activity-based costing is

Question

Addison Company manufactures two products, Regular and Supreme.Addison's overhead costs consist of machining, $2,500,000; and assembling, $1,250,000.Information on the two products is: $$\begin{array} { l c c } 
& \text { Regular } & \text { Supreme } \
\text { Direct labor hours } & 10,000 & 15,000 \
\text { Machine hours } & 10,000 & 30,000 \
\text { Number of parts } & 90,000 & 160,000
\end{array}$$
- Overhead applied to Regular using activity-based costing is

Quizplus · Accepted Answer

To calculate overhead applied to Regular using activity-based costing, allocate machining and assembling costs based on machine hours and number of parts respectively. Regular uses 10,000 machine hours and 90,000 parts. Machining cost per hour is $2,500,000/40,000 = $62.50. Assembling cost per part is $1,250,000/250,000 = $5. Regular's overhead is (10,000 * $62.50) + (90,000 * $5) = $625,000 + $450,000 = $1,075,000.

Addison Company Manufactures Two Products, Regular and Supreme - Overhead Applied to Regular Using Activity-Based Costing Is A)$1,075,000

Addison Company Manufactures Two Products, Regular and Supreme - Overhead Applied to Regular Using Activity-Based Costing Is
A)$1,075,000