Question

Angel 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:

Activity Cost Pools (and Activity Measures)	Estimated Overhead Cost
Machine related (machine-hours)	$	317,520
Batch setup (setups)	$	353,460
Order size (direct labor-hours)	$	250,560

	Expected Activity
Activity Cost Pools	Product X	Product Y	Total
Machine related	5,300	7,300	12,600
Batch setup	10,600	2,300	12,900
Order size	4,300	7,300	11,600

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:

Answer 1

Overhead cost/activity would be=Respective cost/Respective activity

Overhead cost for:

Machine related=317520/12600=$25.2 per machine hour

Batch setups=(353460/12900)=$27.4 per setups

Order size=(250560/11600)=$21.6 per direct labor hours

Hence total overhead cost allocated to X =($25.2*5300 hours)+($27.4*10600 setups)+($21.6*4300 direct labor hours)

=$516880.