Question

oca, Inc., manufactures and sells two products: Product M6 and Product X7. The company has an activity-based costing system with the following activity cost pools, activity measures, and expected activity: Activity Cost Pools Activity Measures Estimated MOH Cost Expected Activity Product M6 Product X7 Total Labor related DLH $152,100 3,000 4,800 7,800 Product orders orders $63,035 400 300 700 Order size Machine hours $505,452 3,700 3,600 7,300 The total overhead to be applied to Product X7 using activity-based costing is closest to:

Answer 1

$350,708

Step-by-step explanation:

Computation for the total overhead to be applied to Product X7 using activity-based costing

First step is the Computation of Activity rate

Estimated overhead cost(a) Total expected activity(b) Activity Rate (a)÷(b)

Labor related $152,100 7,800 $19.50

Production order $63,035 700 $90.05

Order size $505,452 7,300 $69.24

Second step is to the Computation of the total overhead to be applied to Product X7

Activity cost pool and Activity Rate Expected Activity units (Product X7) Activity cost

Labor related $19.50 3,000 $58,500

Production order $90.05 400 $36,020

Order size $69.24 3,700 $256,188

Total Overhead applied to product X7 $350,708 ($58,500+$36,020+$256,188)

Therefore the total overhead to be applied to Product X7 using activity-based costing is closest to:$350,708