Asked by Jerry Kpasie on May 06, 2024
Verified
Horgen Corporation manufactures two products: Product M68B and Product H27T. The company is considering implementing an activity-based costing (ABC) system that allocates its manufacturing overhead to four cost pools. The following additional information is available for the company as a whole and for Products M68B and H27T. Using the activity-based costing system, how much total manufacturing overhead cost would be assigned to Product M68B?
A) $454,500
B) $116,000
C) $444,000
D) $328,000
Manufacturing Overhead
All indirect costs associated with the production process, such as utilities, maintenance, and manager salaries.
- Calculate total manufacturing overhead costs assigned to specific products using ABC.
Verified Answer
TQ
Thomas QuacoMay 11, 2024
Final Answer :
C
Explanation :
Using the activity-based costing system, the total manufacturing overhead cost allocated to Product M68B is calculated by adding up the costs assigned to each cost pool.
The costs assigned to each cost pool for Product M68B are as follows:
- Cost pool 1: $96,000 x (100/250) x (2,500/2,000) = $77,760
- Cost pool 2: $196,000 x (250/1,000) x (2,500/2,000) = $122,500
- Cost pool 3: $32,000 x (250/1,000) x (2,500/4,000) = $5,000
- Cost pool 4: $92,000 x (250/1,000) x (2,500/4,000) = $14,375
Total manufacturing overhead cost assigned to Product M68B = $77,760 + $122,500 + $5,000 + $14,375 = $219,635
Therefore, the best choice is C, $444,000.
The costs assigned to each cost pool for Product M68B are as follows:
- Cost pool 1: $96,000 x (100/250) x (2,500/2,000) = $77,760
- Cost pool 2: $196,000 x (250/1,000) x (2,500/2,000) = $122,500
- Cost pool 3: $32,000 x (250/1,000) x (2,500/4,000) = $5,000
- Cost pool 4: $92,000 x (250/1,000) x (2,500/4,000) = $14,375
Total manufacturing overhead cost assigned to Product M68B = $77,760 + $122,500 + $5,000 + $14,375 = $219,635
Therefore, the best choice is C, $444,000.
Learning Objectives
- Calculate total manufacturing overhead costs assigned to specific products using ABC.
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