Cleveland Choppers manufactures two types of motorcycles, a Base and a Loaded model. The following activity and costs have been gathered:
The number of components and number of setups are chosen as activity-cost drivers for overhead. Assuming an ABC costing system is being used, what is the total overhead cost assigned to the Loaded model?
A) $31,875.
B) $36,000.
C) $28,125.
D) $34,050.
E) $31,125.

Question

Cleveland Choppers manufactures two types of motorcycles, a Base and a Loaded model. The following activity and costs have been gathered:  
The number of components and number of setups are chosen as activity-cost drivers for overhead. Assuming an ABC costing system is being used, what is the total overhead cost assigned to the Loaded model?
A) $31,875. 
B) $36,000. 
C) $28,125. 
D) $34,050. 
E) $31,125.

Quizplus · Accepted Answer

Setups: $22,500/(20 + 40) = $375
Components: $27,000/(15 + 25) = $675
Total overhead cost (Loaded) = ($375 × 40) + ($675 × 25) = $31,875

Cleveland Choppers Manufactures Two Types of Motorcycles, a Base and a Loaded