Question

Shaver Co. manufactures a variety of electric razors for men and women. The company's plant is partially automated. Listed below is cost driver information used in the product-costing system:

Overhead Cost Pool	Budgeted Overhead Cost			Budgeted Cost Driver Level		Cost Driver
Machinery depreciation/maintenance	$	199,822		28,546		Machine hours
Factory depreciation/utilities/insurance		142,730		28,546		Machine hours
Product design		576,000		42,980		Hours in design
Material handling		1,624,000		203,000		Pounds of raw materials

In addition, Shaver expects to spend $570,920 for 8,156 direct labor-hours. Two current product orders had the following requirements:

	Men’s Razors			Women’s Razors
Units produced and sold		21,000			26,000
Direct labor hours		20			30
Pounds of raw materials		793			683
Hours in design		10			13
Machine hours		65			50

Using ABC, how much batch-level overhead is assigned to the current order for Women's Razors based on pounds of raw materials?

Multiple Choice

• $5,464.

• $5,687.

• $5,157.

• $16,307.

• $6,309.

Answer 1

Predetermined overhead rate = 1624000/203000 = $8 per pound of raw material

Overhead assigned to the current order for women razors = 8*683

= $5464