Question

Can you please provide your work to help me gain understanding as well as check the work I've already done for A and B? Thank you!

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) $35,300 $ 7,910 Distribution of Resource Consumption Across Activity Cost Pools Equipment depreciation Indirect labor Machining 0.40 0.40 Setting Up 0.10 .40 Other 0.50 0.20 0 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 54 Product ce Total MHS 8.380 7,800 16,100 Batches 408 1,600 2,000 Additional data concerning the company's products appears below: Sales (total) Direct materials (total) Direct labor (total) Product 54 $80, 180 $ 22,200 $41,500 Product Co $ 65,700 $ 22,800 $ 27,000 Required: 3. 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.

Answer 1

A & B are correct answers.

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

	Amount of overhead cost
Product S4	(8300*1.07+400*3.35) = 10,221
Product C0	(7800*1.07+1600*3.35) = 13,706

d) Calculate product margin

	Product S4	Product C0
Sales	80100	65700
Direct material	22200	22800
Direct labor	41500	27000
Overhead	10221	13706
Product margin	6179	1194

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