Question

Younan Corporation manufactures two products: Product E47F and Product D02M. The company is considering implementing an activity-based costing (ABC) system that allocates its manufacturing overhead to four cost pools. The following additional information is available for the company as a whole and for Products E47F and D02M.

Activity Cost Pool	Activity Measure	Total Cost		Total Activity
Machining	Machine-hours	$	165,000	11,000	MHs
Machine setups	Number of setups	$	150,000	250	setups
Product design	Number of products	$	70,000	2	products
Order size	Direct labor-hours	$	310,000	10,000	DLHs

Activity Measure	Product E47F	Product D02M
Machine-hours	5,000	6,000
Number of setups	200	50
Number of products	1	1
Direct labor-hours	4,000	6,000

Using the ABC system, the percentage of the total overhead cost that is assigned to Product E47F is closest to:

rev: 03_17_2018_QC_CS-119201

Multiple Choice

• 17.84%

• 33.09%

• 50.00%

• 50.94%

Answer 1

6
Total overhead cost = 165000+150000+70000+310000= $695000
	Product D02M
Machining	75000	=165000/11000*5000
Machine setups	120000	=150000/250*200
Product design	35000	=70000/2*1
Order size	124000	=310000/10000*4000
Total	354000
Percentage of the total overhead cost that is assigned to Product D02M = 354000/695000= 50.94%