Question

Musich Corporation has an activity-based costing system with three activity cost pools-Machining, Setting Up, and other. The company's overhead costs, which consist of equipment depreciation and indirect labor, have been allocated to the cost pools already and are provided in the table below. Equipment depreciation Indirect labor Activity Cost Pools Machining setting Up Other $10,400 $ 51,200 $ 24,800 5,000 3,400 4,600 $16,400 $ 54,600 $ 29,400 Total $ 86,400 14,000 $100,400 Total 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. Data concerning the two products and the company's costs appear below: Product 33 Product Ti Total MHS 6,500 6,700 13,200 Batches 1,000 1,600 2,600 Sales (total) Direet materials (total) Direct labor (total) Product 23 Product T1 $240,800 $260,500 $ 86,500 $98,600 $111,000 $107, 700 Required: 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. Complete this question by entering your answers in the tabs below. Required A Required B Required C

Answer 1

Activity Rate = Overhead/Total Activity
Pool	Amount	Driver	Rate
Machining	16,400	13,200	1.24	Per machine hour
Setting up	54,600	2,600	21.00	per batch
b.Overhead Assigned = Rate*Driver consumed
	Product 3	Product T1
Machining	8,060.00	8,308.00
Setting up	1,240.00	33,600.00
Overhead Assigned	9,300.00	41,908.00
c.Product Margin
	Product 3	Product T1
Sales	240,800	260,500
Less: Costs
Direct Material	86,500	98,600
Direct Labor	111,000	107,700
Overheads	9,300	41,908
Product Margin	34,000	12,292