Eagleton Inc. is a retail business that sells fedoras and other decorative hats. They are in the process of evaluating their costing systems and working towards an Activity-Based Costing (ABC) implementation. They have compiled the following data about their Manufacturing Overhead (MOH) costs:
The production department tallied the following amounts in a recent production run: 3,600 square feet; 2,009 supervisor hours; and 998 pounds of material. What is the total amount of unit-level MOH costs allocated to the production run? (If required, round calculations to two decimal places.)
A) $0.00
B) $3,986.16
C) $9,940.08
D) $29,636.26

Question

Eagleton Inc. is a retail business that sells fedoras and other decorative hats. They are in the process of evaluating their costing systems and working towards an Activity-Based Costing (ABC) implementation. They have compiled the following data about their Manufacturing Overhead (MOH) costs:
 The production department tallied the following amounts in a recent production run: 3,600 square feet; 2,009 supervisor hours; and 998 pounds of material. What is the total amount of unit-level MOH costs allocated to the production run? (If required, round calculations to two decimal places.)
A) $0.00 
B) $3,986.16 
C) $9,940.08 
D) $29,636.26

Quizplus · Accepted Answer

This question requires the identification of which, if any, of the activities listed are at the unit level. In this case, the indirect materials would be considered a unit-level cost. Next, calculate the per unit cost: $22,900/2,300 pounds = $9.96 per pound. Lastly, multiply this by the pounds of materials used: $9.96 per pound times 998 pounds of materials equals $9,940.08 allocated to unit-level activities (Choice C).