Question

Angara Corporation uses activity-based costing to determine product costs for external financial reports. The company has provided the following data concerning its activity-based costing system:

Activity Cost Pool (and Activity Measure) Total Cost
Machine related (machine-hours) $ 103,800
Batch setup (setups) $ 402,600
Order size (direct labor-hours) $ 82,600
Total Activity
Activity Cost Pools Product X Product Y Total
Machine related 800 5,200 6,000
Batch setup 3,100 2,900 6,000
Order size 6,000 1,000 7,000

The total amount of overhead cost allocated to Product X would be closest to: ________.

Answer 1

Total amount = $292,650

Step-by-step explanation:

As per the data given in the question,

Machine related (machine-hours) = $103,800

Batch setup (setups) = $402,600

Order size (direct labor-hours) = $82,600

For product X :

Machine related = ($103,800÷6000×800)

= $13,840

Batch setup = $402,600 × 3,100 ÷6,000

= $208,010

General factory = $82,600 × 6,000 ÷ 7000 = $70,800

Total amount = ($13,840 + $208,010 + $70,800)

= $292,650