Question

Greife Corporation's activity-based costing system has three activity cost pools--Machining, Setting Up, and Other. The company's overhead costs have already been allocated to these cost pools as follows: Machining Setting Up Other $90,138 $75,651 $25,400 Costs in the Machining cost pool are assigned to products based on machine-hours (MHs) and costs in the Setting Up cost pool are assigned to products based on the number of batches. Costs in the Other cost pool are not assigned to products. The following table shows the machine-hours and number of batches associated with each of the company's two products: Product KO Product W9 MHS Batches 2,600 800 8,260 870 10,860 1,670 Total Additional data concerning the company's products appears below: Sales (total) Direct materials (total) Direct labor (total) Product KO Product W9 $251,000 $263,000 $ 84,000 $ 85,200 $ 94,400 $ 60,500 Required: a. Calculate activity rates for each activity cost pool using activity-based costing. b. Determine the amount of overhead cost that would be assigned to each product using activity-based costing. c. Determine the product margins for each product using activity-based costing. Complete this question by entering your answers in the tabs below. Required A Required B Required C Calculate activity rates for each activity cost pool using activity-based costing. (Round your answers to 2 decimal places.) Activity Rate Activity Cost Pools Machining Setting up per MH per batch

Answer 1

a.
Activity cost pools	Activity rate
Machining [ 90138 / 10860 ]	8.30	per MH
Setting up [ 75651 / 1670 ]	45.30	per batch

b.
Overhead allocation :	Product K0	Product W9
Machining	21580 [ 8.30 * 2600 ]	68558 [ 8.30 * 8260 ]
Setting up	36240 [ 45.30 * 800 ]	39411 [ 45.30 * 870 ]
Amount of overhead cost	57820	107969

c.
	Product K0	Product W9
Sales	251000	263000
(-) Direct materials	84000	85200
(-) Direct labor	94400	60500
(-) Amount of overhead cost	57820	107969
Product margin	14780	9331