Question

The Princeville Company placed five (5) orders for Product 12B from Brookston Corporation. Brookston has the following information about Product 12B:

Activity Cost Pools Activity Rate Product 12B
Activity Machine Setups $12.00per Machine hour 40MHs
Customer Orders $10.00per Order 5 Orders
What is the overhead cost assigned to Princeville for its five (5) orders of Product 12B?

Answer 1

Cost assigned to Princeville = Machine setup cost + Customer order cost.

Cost assigned to Princeville = $12.00*40MHs + $10.00*5MHs

Cost assigned to Princeville = $530

So, the overhead cost assigned to Princeville for its five (5) orders of Product 12B is $530