Johnstone Company manufactures two products, Board 12 and Case 165.Johnstone's overhead costs consist of setting up machines, $1,600,000; machining, $3,600,000; and inspecting, $1,200,000.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 Board 12 using activity-based costing is

Question

Quizplus · Accepted Answer

Overhead applied to Board 12 using activity-based costing is $3,328,000. This is calculated as follows:Setting up machines: $1,600,000 x (600 / 1,000) = $960,000Machining: $3,600,000 x (24,000 / 50,000) = $1,728,000Inspecting: $1,200,000 x (800 / 1,500) = $640,000Total overhead applied to Board 12: $960,000 + $1,728,000 + $640,000 = $3,328,000

Johnstone Company Manufactures Two Products, Board 12 and Case 165