Filosa, Inc., manufactures and sells two products: Product W9 and Product F8. The company has an activity-based costing system with the following activity cost pools, activity measures, and expected activity: The total overhead applied to Product F8 under activity-based costing is closest to:

Question

Filosa, Inc., manufactures and sells two products: Product W9 and Product F8. The company has an activity-based costing system with the following activity cost pools, activity measures, and expected activity:  The total overhead applied to Product F8 under activity-based costing is closest to:

Quizplus · Accepted Answer

To calculate the overhead applied to Product F8 under activity-based costing, we need to follow these steps:

1. Calculate the predetermined overhead rate for each activity cost pool:

Activity 1: $234,000 ÷ 2,000 hours = $117/hour
Activity 2: $114,000 ÷ 9,000 setups = $12.67/setup
Activity 3: $306,000 ÷ 12,000 machine hours = $25.50/machine hour
Activity 4: $360,000 ÷ 40,000 production runs = $9/run

2. Calculate the total overhead cost assigned to each product by multiplying the activity rates by the expected activity for each product:

Product W9:
Activity 1: 400 hours × $117/hour = $46,800
Activity 2: 1,000 setups × $12.67/setup = $12,670
Activity 3: 8,000 machine hours × $25.50/machine hour = $204,000
Activity 4: 20,000 production runs × $9/run = $180,000
Total overhead cost assigned to Product W9: $443,470

Product F8:
Activity 1: 1,600 hours × $117/hour = $187,200
Activity 2: 500 setups × $12.67/setup = $6,335
Activity 3: 4,000 machine hours × $25.50/machine hour = $102,000
Activity 4: 10,000 production runs × $9/run = $90,000
Total overhead cost assigned to Product F8: $385,535

Therefore, the total overhead applied to Product F8 under activity-based costing is closest to $383,312 (which is the same as the overhead cost assigned to Product F8). The answer is choice C).