Question

Valspar Corporation manufactures two models of outdoor furniture, standard and deluxe. The following activity and cost data are available: Product Number of Setups Number of Parts Number of Direct Labor Hours Standard 22 8 375 Deluxe 28 12 225 In the first-stage allocation, $55,000 of overhead costs were allocated to the Setups activity pool and $8,000 of overhead costs were allocated to the Assembly activity pool. Number of setups has been identified as the activity driver for Setups costs and number of parts has been identified as the activity driver for Assembly costs. What is the total amount of overhead cost assigned to the deluxe product using activity-based costing? $49,600 O $60,400 O $65,000 0 $35.600 None of the above

Answer 1

Your required answer is option D i.e. $35,600

Explanation:

Number of Number of Setups Parts 22 8 Standard Deluxe Total 28 12 50 20

Deluxe $30,800 Overhead cost of Setup Acticity Pool = Overhead Cost X Number of Deluxe setups/Total Setups Overhead cost Assemply = Overhead cost X Deluxe Number of Parts/Total Number of Parts Total Cost $4,800 $35,600

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