Goldie Company manufactures two models of pens-a standard and a deluxe model. Three activities have been identified as cost drivers and the related overhead costs ($60,000) pooled together to arrive at the following information: $$\begin{array} { l l l l }
\text { Product } & \begin{array} { l }
\text { Number of } \
\text { Setups }
\end{array} & \begin{array} { l }
\text { Number of } \
\text { Components }
\end{array} & \begin{array} { l }
\text { Number of } \
\text { DLH }
\end{array} \
\text { Standard } & 22 & 8 & 375 \
\text { Deluxe } & 28 & 12 & 225 \
\text { Costs per pool } & \$ 15,000 & \$ 36,000 & \$ 9,000
\end{array}$$ If activity- based costing is used, the cost assigned to the standard model using the number of setups would be:
A) $44,000
B) $6,600
C) $8,400
D) $33

Question

Goldie Company manufactures two models of pens-a standard and a deluxe model. Three activities have been identified as cost drivers and the related overhead costs ($60,000) pooled together to arrive at the following information: $$\begin{array} { l l l l } 
\text { Product } & \begin{array} { l } 
\text { Number of } \
\text { Setups }
\end{array} & \begin{array} { l } 
\text { Number of } \
\text { Components }
\end{array} & \begin{array} { l } 
\text { Number of } \
\text { DLH }
\end{array} \
\text { Standard } & 22 & 8 & 375 \
\text { Deluxe } & 28 & 12 & 225 \
\text { Costs per pool } & \$ 15,000 & \$ 36,000 & \$ 9,000
\end{array}$$ If activity- based costing is used, the cost assigned to the standard model using the number of setups would be:
A) $44,000
B) $6,600
C) $8,400
D) $33

Quizplus · Accepted Answer

The cost assigned to the standard model using the number of setups is calculated by dividing the cost pool for setups ($15,000) by the total number of setups (22 + 28 = 50) and then multiplying by the number of setups for the standard model (22). This results in (15,000 / 50) * 22 = $6,600.

Goldie Company Manufactures Two Models of Pens-A Standard and a Deluxe