A company uses activity-based costing to determine the costs of its three products: A, B, and...

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A company uses activity-based costing to determine the costs of its three products: A, B, and C. The budgeted cost and activi

business accounting

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Answer 1

Answer #1

First activity rate for each activity will have to be determined and then overhead assigned is determined

Activity 1	Budgeted Costs/Total budgeted activity
Activity 1	70000/(6000+9000+20000)
Activity 1	70000/35000
Activity 1	$2.00

Activity 2	Budgeted Costs/Total budgeted activity
Activity 2	45000/(7000+15000+8000)
Activity 2	45000/30000
Activity 2	$1.50

Activity 3	Budgeted Costs/Total budgeted activity
Activity 3	82000/(2500+1000+1625)
Activity 3	82000/5125
Activity 3	$16.00

Calculate overhead assigned to product B using activity based costing

Activity 1	$18,000	2*9000
Activity 2	$22,500	1.5*15000
Activity 3	$16,000	16*1000
Costs assigned	$56,500

Thus, overhead assigned to product B is $56,500

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Answer 2

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