Question

Weirick, Inc., manufactures and sells two products: Product T8 and Product P4. The company has an activity-based costing system with the following activity cost pools, activity measures, and expected activity: Estimated Expected Activity Activity Cost Pools Activity Measures Overhead Cost Product T8 Product P4 Total Labor-related DLHs $ 145,000 4,000 2,000 6,000 Production orders orders 68,360 1,100 300 1,400 Order size MHs 1,069,190 2,700 3,100 5,800 $ 1,282,550 The total overhead applied to Product P4 under activity-based costing is closest to:

Answer 1

$634,443

Step-by-step explanation:

The computation of total overhead applied to Product P4 under activity-based costing is shown below:-

Activity Expected Expected Activity

costs Activity Rate

a b c = a ÷ b

Labor related $145,000 6,000 DLHs 24.17 per DLHs

Production

orders $68,360 1,400 orders 48.83 Per orders

Order size $1,069,190 5,800 MHs 184.34 per MHs

Product P4

Activity driver Overhead

Incurred Assigned

d e = c × d

2,000 $48,340

300 $14,649

3,100 $571,454

Total overhead cost $634,443