Question

Howell Corporation's activity based costing system has three activity cost pools--Machining. Setting Up, and other. The company's overhead costs, which consist of equipment depreciation and indirect labor, are allocated to the cost pools in proportion to the activity cost pools' consumption of resources. Equipment depreciation (total) Indirect labor (total) $ 27,200 $ 7,840 Distribution of Resource Consumption Across Activity Cost Pools Equipment depreciation Indirect labor Machining 0.40 0.40 Setting Up Other 0.300 .30 0.30 0.30 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. Product S4 Product Co MS 13,200 7,000 20,200 Batches 400 1,200 1,600 Total Additional data concerning the company's products appears below: Sales (total) Direct materials (total) Direct labor (total) Product 54 $81,400 $27,000 $37,100 Product co $ 81,500 $ 28,400 $ 32.600 Required: a. Assign overhead costs to activity cost pools using activity-based costing. b. Calculate activity rates for each activity cost pool using activity based costing. c. Determine the amount of overhead cost that would be assigned to each product using activity based costing. d. Determine the product margins for each product using activity-based costing. Complete this question by entering your answers in the tabs below.

Answer 1

	Machining	setting up	other	total
Equipment Depreciation	10,880	8160	8160	27200
Indirect Labor	3136	2352	2352	7840
Total	14016	10512	10512	35040

Rate = overhead cost/driver

Machining =14016/20200 =$0.69 per hour

Setting up = 10512/1600 =$6.57 per batch

3.product s4 = 13200*0.69+400*6.57

=$11,736

Product C0 = 7000*0.69 +1200*6.57

=$12714

4.product margin

Product s4 = 81400-27000-37100 - 11736

=$5564

Product c0 = 81500-28400-32600-12714

=$7786