Question

3. (7 points) Griffin Corporation's activity-based costing system has three activity cost pools-- Machining, Setting Up, and Other. The company's overhead costs have already been allocated to these cost pools as follows: Machining Setting Up Other $ 41,200 9,000 $ 33,800 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. The following table shows the machine-hours and number of batches associated with each of the company's two products: Product KO Product W9 Total MHS 3,700 16,300 20,000 Batches 100 1,900 2,000 Additional data concerning the company's products appears below: a. Calculate activity rates for each activity cost pool using activity-based costing. b. Determine the amount of overhead cost that would be assigned to each product using activity- based costing. c. Determine the product margins for each product using activity-based costing.

Answer 1

a	Activity cost pools	Activity Rate
	Machining($41,200/20,000 hours)	$2.06	per MH
	Setting up($9,000/2,000 bacthes)	$4.50	per batches
b		Product K0	Product W9
	Machining(Machine hours*$2.06)	$7,622	$33,578
	Setting up(No. of batches*$4.50)	$450	$8,550
	Total overhead cost allocated to products	$8,072	$42,128
	Note on Q3:The product margin cannot be calculated as there is no sales price