Correct answer------------(C ) $920,000
Working
Calculation of Activity rates | |||||
Activity Cost Pool | Activity driver | Overhead Cost (A) | Expected Activity (B) | Activity rate (A/B) | |
Ordering & receiving | Number of order | $ 400,000 | 2000 | $ 200.00 | Per order |
Mixing | Number of Hour | $ 500,000 | 50000 | $ 10.00 | Per Hour |
Testing | Number of test | $ 450,000 | 1500 | $ 300.00 | Per test |
.
Cost assigned to Slime | |||
Activity name | Activity Rates | Activity | ABC Cost |
(A) | (B) | (A x B) | |
Ordering & receiving | $ 200.00 | 1,600.00 | $ 320,000 |
Mixing | $ 10.00 | 30,000.00 | $ 300,000 |
Testing | $ 300.00 | 1,000.00 | $ 300,000 |
Total Overheads assigned | $ 920,000.00 |
33. A company incurs $1,350,000 of overhead each year in three departments: Ordering and Receiving, Mixing,...
79. A company incurs $4083500 of overhead each year in three departments: Ordering and Receiving, Mixing, and Testing. The company prepares 2000 purchase orders, works 50000 mixing hours, and performs 1500 tests per year in producing 200000 drums of Goo and 600000 drums of Slime. The following data are available: Department Estimated use of Driver Cost Ordering and Receiving 2000 $1260000 Mixing 50000 1475000 Testing 1500 1348500 Production information for Slime is as follows: Department Estimated use of Driver Ordering...
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