Question

Activity rates from Mcelderry Corporation's activity-based costing system are listed below. The company uses the activity rates to assign overhead cost to products:

Processing customer orders $49.87 per order
Assembling products $2.88 per assembly hour
Setting up batches $18.26 per batch
Last year, Product Q06J involved 10 customer orders, 580 assembly hours, and 12 batches. How much overhead cost would be assigned to Product Q06J using the activity-based costing system?
a) 42,748.02
b) 2,388.22
c) 219.12
d) 71.01

Answer 1

b) 2,388.22

Step-by-step explanation:

Activity Cost Pool Activity Rates Activity Overhead cost

Processing customer 49.87 per order 10 498.7

orders

Assembling products 2.88 per assembly hour 580 1670.4

Setting up batches 18.26 per batch 12 219.12

Total Overhead cost assigned 2,388.22