Angara Corporation uses activity-based costing to determine product costs for ex
ID: 2430936 • Letter: A
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: Activities (and Activity Measures) Estimated Overhead Cost Machine related (machine-hours) $268,400 Batch setup (setups) $279,300 General factory (direct labour-hours) $192,000 Expected Activity Activities Product X Product Y Total Machine related 4,500 6,500 11,000 Batch setup 9,000 1,500 10,500 General factory 3,500 6,500 10,000 Assuming that actual activity turns out to be the same as expected activity, the total amount of overhead cost allocated to Product X would be closest to: $279,300 $355,700 $416,400 $635,000
Explanation / Answer
Answer:
Total amount of overhead cost allocated to Product X = $416,400
Working notes for the above answer is as under
cost per machine related hour.
=Machine realted cost / Number of machine Hour
=268400/11,000
=$24.40
cost per set up.
=batch related cost / Number of set up
=279300/10500
=$26.6
Cost per direct labor
=General factory cost/Machine Hour
=192000/10,000
=$19.2
Rate
No of
activity
Total Cost
A
B
C=A*B
Machine related
24.4
4500 hour
109800
batch related
26.6
9000 set up
239400
General factory cost
19.2
3500
67200
416400
the total amount of overhead cost allocated to Product X = $416,400
Rate
No of
activity
Total Cost
A
B
C=A*B
Machine related
24.4
4500 hour
109800
batch related
26.6
9000 set up
239400
General factory cost
19.2
3500
67200
416400