Question

Cerezo Corporation uses the following activity rates from its activity-based costing to assign overhead costs to products:

Activity Cost Pools Activity Rate
Assembling products $2.86 per assembly hour
Processing customer orders $48 .23 per customer order
Setting up batches $76.23 per batch

Data for one of the company's products follow:

Product Q79P
Number of assembly hours 252
Number Of customer orders 42
Number OE batches 68

How much overhead cost would be assigned to Product Q79P using the activity-based costing system?

Answer 1

the overhead cost assigned is $7,930.02

Step-by-step explanation:

The computation of the overhead cost assigned to Product Q79P is shown below:

= (Number of assembly hours × Activity rate per assembly hour) + (Number of customer orders × Activity rate per customer order) + (Number of batches × Activity rate per batch)

= (252 × $2.86) + (42 × $48.23) + (68 × $76.23)

= $720.72 + $2,025.66 + $5,183.64

= $7,930.02

hence, the overhead cost assigned is $7,930.02