Question

Deemer Corporation has an activity-based costing system with three activity cost pools--Processing, Supervising, and Other. In the first stage allocations, costs in the two overhead accounts, equipment expense and indirect labor, are allocated to the three activity cost pools based on resource consumption. Data used in the first stage allocations follow:

Overhead costs:
Equipment expense	$	125,000
Indirect labor	$	5,200

Distribution of Resource Consumption Across Activity Cost Pools:

	Activity Cost Pools
	Processing	Supervising		Other
Equipment expense	0.40	0.40		0.20
Indirect labor	0.40	0.40		0.20

Processing costs are assigned to products using machine-hours (MHs) and Supervising costs are assigned to products using the number of batches. The costs in the Other activity cost pool are not assigned to products. Activity data for the company's two products follow:

Activity:

	MHs (Processing)	Batches (Supervising)
Product F6	16,400	910
Product X0	1,490	1,350
Total	17,890	2,260

What is the overhead cost assigned to Product X0 under activity-based costing?

Answer 1

First stage allocation

	Processing	Supervising	Other	Total
Equipment expense	50000	50000	25000	125000
Indirect labor	2080	2080	1040	5200
Total	52080	52080	26040	130200

Overhead assigned to product X0

	Product X0
Processing	1490*2.91 = 4336
Supervising	1350*23.04 = 31104
Total overhead cost assigned	35440