Question

Brenot Corporation uses activity-based costing to determine product costs for external financial reports. Activity rates computed at the beginning of the year are used to apply manufacturing overhead costs to products. The company has provided the following data concerning its activity-based costing system.
The data used to develop activity rates were:

Activity Cost Pools

Estimated Overhead Cost

Expected Activity

Machine related (machine-hours)	$379,600	13,000	MHs
Batch setup (setups)	$1,144,800	27,000	setups
General factory (direct labor-hours)	$420,500	29,000	DLHs

The actual activity for the year was:

Activity Cost Pools	Total	Product X	Product Y
Machine related (machine-hours)	13,000	11,000	2,000
Batch setup (setups)	26,000	3,000	23,000
General factory (direct labor-hours)	30,000	24,000	6,000

The actual total manufacturing overhead cost incurred for the year was $1,942,300.

The activity rate computed at the beginning of the year for the batch setup activity cost pool is closest to:

Select one:

a. $42.40

b. $74.80

c. $49.80

d. $381.60

The total amount of overhead cost allocated to Product X during the year would be closest to:

Select one:

a. $1,145,000

b. $972,450

c. $796,400

d. $224,000

The credits to the Manufacturing Overhead control account during the year (prior to closing out the balance) would have totaled:

Select one:

a. $1,932,300

b. $1,929,650

c. $1,917,000

d. $1,942,300

The debits to the Manufacturing Overhead control account during the year (prior to closing out the balance) would have totaled:

Select one:

a. $1,932,200

b. $1,929,650

c. $1,942,300

d. $1,917,000

Answer 1

1) Activity rate of batch setup = 1144800/27000 = 42.40 per setup

So answer is a) $42.40

2) Total amount of overhead cost allocated to product X

	Product x
Machine related	379600/13000*11000 = 321200
Batch setup	3000*42.40 = 127200
General factory	420500/29000*24000 = 348000
Total	796400

c) $796400

3) Credit to manufacturing overhead control account

Machine related	379600
Batch setup (42.40*26000)	1102400
General factory (14.50*30000)	435000
Total	1917000

So answer is c) $1917000

4) Debit to manufacturing overhead control account = Actual overhead = 1942300

So answer is c) $1942300