ssume that a pet food manufacturer is considering adding two types of pet food to their existing product line. Research had determined that there is good demand for dog food in forty pound bags and cat food in one-half pound cans.
The company identified the following partial list of activities, costs, and activity drivers expected for the next year.

-Refer to the data above. How much overhead cost will be assigned to each product line using activity-based costing (ABC)?

Question

ssume that a pet food manufacturer is considering adding two types of pet food to their existing product line. Research had determined that there is good demand for dog food in forty pound bags and cat food in one-half pound cans.
The company identified the following partial list of activities, costs, and activity drivers expected for the next year.

-Refer to the data above. How much overhead cost will be assigned to each product line using activity-based costing (ABC)?

Quizplus · Accepted Answer

Using activity-based costing, the total overhead cost of $925,000 would be allocated based on the cost drivers and activity rates provided. For Dog Food, the overhead cost would be allocated as follows: ($20 x 5,000) + ($90 x 4,000) + ($150 x 1,000) = $800,000. For Cat Food, the overhead cost would be allocated as follows: ($20 x 2,000) + ($90 x 1,000) + ($150 x 2,000) = $125,000. Therefore, the total overhead cost assigned to each product line would be: Dog Food: $860,000; Cat Food: $65,000.

Ssume That a Pet Food Manufacturer Is Considering Adding Two