Question

XYZ Corporation manufactures two models of office chairs, a standard and a deluxe model. The overhead costs for setups and components pools are $60,000 and $58,900, respectively. The following activity has been compiled:

Number of Number of Number of
Setups Components Direct Labor Hours
Standard 11 6 295
Deluxe 29 13 205
Overhead costs $63,600 $102.600
Number of setups and number of components are identified as activity-cost drivers for overhead. Assuming an activity based costing system is used, what is the total amount of overhead costs assigned to the standard model?
A. $109,200
B. $57,000
C. $83,000
D. $83,100

Answer 1

$49,890

Step-by-step explanation:

The computation of the total amount of overhead costs assigned to the standard model is given below

The cost driver rate is

For setup

= $63,600 ÷ (11 + 29)

= 1,590

For component

= $102,600 ÷ (6 + 13)

= 5,400

Now the total amount of overhead for the standard model is

= 11 × 1,590 + 6 × 5,400

= $17,490 + $32,400

= $49,890

This is the answer but the same is not provided in the given options