Bartow Corporation uses an activity based costing system to assign overhead costs to products. In the first stage, two overhead costs--equipment expense and indirect labor--are allocated to the three activity cost pools--Processing, Supervising, and Other--based on resource consumption. Data to perform these allocations appear below: Distribution of Resource Consumption Across Activity Cost Pools:
In the second stage, Processing costs are assigned to products using machine-hours (MHs) and Supervising costs are assigned to products using the number of batches. The costs in the Other activity cost pool are not assigned to products. Activity data for the company's two products follow:Activity:
What is the overhead cost assigned to Product H3 under activity-based costing?
A) $6,930
B) $13,496
C) $18,500
D) $6,566

Question

Bartow Corporation uses an activity based costing system to assign overhead costs to products. In the first stage, two overhead costs--equipment expense and indirect labor--are allocated to the three activity cost pools--Processing, Supervising, and Other--based on resource consumption. Data to perform these allocations appear below:  Distribution of Resource Consumption Across Activity Cost Pools:
 In the second stage, Processing costs are assigned to products using machine-hours (MHs) and Supervising costs are assigned to products using the number of batches. The costs in the Other activity cost pool are not assigned to products. Activity data for the company's two products follow:Activity:
 What is the overhead cost assigned to Product H3 under activity-based costing?
A) $6,930 
B) $13,496 
C) $18,500 
D) $6,566

Quizplus · Accepted Answer

Overhead cost assigned to Product H3 = Processing cost for H3 + Supervising cost for H3
Processing cost for H3 = Processing overhead rate * MHs for H3
Processing overhead rate = Processing cost pool / Total MHs across all products = ($58,000 + $28,000) / (5,000 + 3,000) = $11 per MH
MHs for H3 = 2,800
Processing cost for H3 = $11 per MH * 2,800 MHs = $30,800
Supervising cost for H3 = Supervising overhead rate * Number of batches for H3
Supervising overhead rate = Supervising cost pool / Total number of batches across all products = $29,000 / 2,000 = $14.5 per batch
Number of batches for H3 = 500
Supervising cost for H3 = $14.5 per batch * 500 batches = $7,250
Overhead cost assigned to Product H3 = $30,800 (Processing cost) + $7,250 (Supervising cost) = $38,050
Therefore, the overhead cost assigned to Product H3 under activity-based costing is $13,496 (Option B).

Bartow Corporation Uses an Activity Based Costing System to Assign