North Street Corporation manufactures two models of motorized go-carts, a standard and a deluxe model. The following activity and cost information has been compiled:

Number of setups and number of components are identified as activity-cost drivers for overhead. Assuming an activity-based costing system is used, what is the total amount of overhead cost assigned to the deluxe model?
A) $21,960
B) $17,025
C) $16,840
D) $17,210

Question

North Street Corporation manufactures two models of motorized go-carts, a standard and a deluxe model. The following activity and cost information has been compiled:

Number of setups and number of components are identified as activity-cost drivers for overhead. Assuming an activity-based costing system is used, what is the total amount of overhead cost assigned to the deluxe model?
A) $21,960 
B) $17,025 
C) $16,840 
D) $17,210

Quizplus · Accepted Answer

Setups: 16,000 ÷ (17 + 33) = $320
Components: $18,050 ÷ (7 + 12) = $950
Total amount of overhead cost = ($320 × 33) + ($950 × 12) = $21,960

North Street Corporation Manufactures Two Models of Motorized Go-Carts, a Standard