Question

Angara Corporation uses activity-based costing to determine product costs for external financial reports. The company provided the following data concerning its activity-based costing system:Activities (and Activity Measures) Estimated Overhead CostMachine related (machine-hours) $317,520Batch setup (setups) $353,460General factory (direct labour-hours) $250,560Expected ActivityActivities Product X Product Y TotalMachine related 5,300 7,300 12,600Batch setup 10,600 2,300 12,900General factory 4,300 7,300 11,600Required:Assuming that actual activity turns out to be the same as expected activity, the total amount of overhead cost allocated to Product X would be closest to:a) $353,460b) $773,880c) $420,420d) $516,880

Answer 1

d) $516,880

Step-by-step explanation:

The computation of total amount of overhead cost allocated is shown below:-

For Machine = $317,520 ÷ 12,600 × 5,300

= $133,560

For Batch set up = $353,460 ÷ 12,900 × 10,600

= $290,440

For General factory = $250,560 ÷ 11,600 × 4,300

= $92,880

Total amount of overhead cost allocated to Product X = Machine + Batch set up + General factory

= $133,560 + $290,440 + $92,880

= $516,880