Question

Boswell Company manufactures two products, Regular and Supreme. Boswell’s overhead costs consist of machining, $5000000; and assembling, $2500000. Information on the two products is: Regular Supreme Direct labor hours 10000 15000 Machine hours 10000 30000 Number of parts 90000 160000 Overhead applied to Supreme using activity-based costing is

Answer 1

$5,350,000

Step-by-step explanation:

The computation of the overhead applied to supreme using activity based costing is shown below:

= Machine hours × machine hour rate + number of parts × cost per part

= 30,000 × ($5,000,000 ÷ (10,000 + 30,000)) + 160,000 × ($2,500,000 ÷ (90,000 + 160,000))

= 30,000 × $125 + 160,000 × $10

= $3,750,000 + $1,600,000

= $5,350,000

Hence, the overhead applied to supreme is $5,350,000