Question

TB Problem Qu. 7-189 Groleau Corporation has an activity-based costing ... 8 10 points Groleau Corporation has an activity-based costing system with three activity cost pools--Processing, Setting Up, and other. The company's overhead costs, which consist of factory utilities and indirect labor, are allocated to the cost pools in proportion to the activity cost pools' consumption of resources. Costs in the Processing 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. Data concerning the two products and the company's costs and activity-based costing system appear below: 8 010542 Factory utilities (total) Indirect labor (total) $29,200 $10,500 Distribution of Resource Consumption Across Activity Cost Pools Processing Setting Up Other Factory utilities 0.30 0.20 0.50 Indirect labor 8.40 0.40 0.20 Product SB Product F1 Total MHS 3,100 7 300 10,400 Batches 800 700 1,500 Sales (total) Direct materials (total) Direct labor (total) Product 58 $68,500 $24,200 $32,800 Product F1 $ 97,500 $ 39,200 $ 41,100 Required: a. Assign overhead costs to activity cost pools using activity-based costing.

Answer 1

a
	Activity cost pool
	Processing	Setting up	Other	Total
Factory utilities	8760	5840	14600	29200
Indirect labor	4200	4200	2100	10500
Total	12960	10040	16700	39700
b
Activity cost pools	Activity rate
Processing	1.25	per MH	=12960/10400
Setting up	6.69	per batch	=10040/1500
c
	Amount of overhead costs
Product S8	9227	=(3100*1.25)+(800*6.69)
Product F1	13808	=(7300*1.25)+(700*6.69)
d
	Product S8	Product F1
Sales	68500	97500
Less: Costs
Direct materials	24200	39200
Direct labor	32800	41100
Overhead	9227	13808
Total costs	66227	94108
Product Margin	2273	3392
	Product Margin
Product S8	2273
Product F1	3392