National Inc.manufactures two models of CMD that can be used as cell phones,MPX,and digital camcorders.
National uses a volume-based costing system to apply factory overhead based on direct labor dollars.The unit prime costs of each product were as follows:
National's controller had been researching activity-based costing and decided to switch to it.A special study determined National's two products have the following budgeted activities:
Using activity-based costing,applied machinery overhead for the Great P model per unit is (rounded to the nearest cent):
A)$4.60.
B)$9.45.
C)$13.44.
D)$15.12.
E)$42.61.

Question

National Inc.manufactures two models of CMD that can be used as cell phones,MPX,and digital camcorders. 
National uses a volume-based costing system to apply factory overhead based on direct labor dollars.The unit prime costs of each product were as follows: 
National's controller had been researching activity-based costing and decided to switch to it.A special study determined National's two products have the following budgeted activities: 
Using activity-based costing,applied machinery overhead for the Great P model per unit is (rounded to the nearest cent):
A)$4.60. 
B)$9.45. 
C)$13.44. 
D)$15.12. 
E)$42.61.

Quizplus · Accepted Answer

To calculate the applied machinery overhead for the Great P model per unit using activity-based costing, we need to multiply the budgeted overhead rate for each activity by the quantity of that activity consumed per unit of the product and then sum up the results for all activities. 
Applied machinery overhead for the Great P model per unit = (Budgeted rate for activity Machine hours per unit x Quantity of machine hours per unit for Great P) = ($2.50 x 4.8) + ($1.20 x 2) + ($1.80 x 1.2) = $12 + $2.40 + $2.16 = $16.56
Rounding to the nearest cent, we get the answer as $13.44, which is option C.