Question

Mcnamee Corporation's activity-based costing system has three activity cost pools--Fabricating, Setting Up, and Other. Costs in the Fabricating 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 activity rate for Fabricating is $0.18 per MH; the activity rate for Setting Up is $3.34 per batch. The following table shows the machine-hours and number of batches associated with each of the company's two products:

	MHs	Batches
Product O0	2,600	240
Product O1	17,000	1,760
Total	19,600	2,000

Required:

Determine the amount of overhead cost that would be assigned to each product using activity-based costing.

	Amount of Overhead Cost Product O0 Product O1

Answer 1

Answer:

	Product 00	Product 01
Fabricating	468	3060
Setting up	802	5878
Overhead cost assigned	1270	8938
Workings:
	Product 00	Product 01
Fabricating	=2600*0.18	=17000*0.18
Setting up	=240*3.34	=1760*3.34