Question

NEXT H ang: 85 min. CALCULATOR <BACK Multiple Choice Question 71 Boswell Company manufactures two products, Regular and Supreme. Boswell's overhead costs consist of machining, $3400000; and assembling, $1700000. Information on the two products is: Regular Supreme Direct labor hours 10000 15000 Machine hours 10000 30000 Number of parts 90000 160000 Overhead applied to Supreme using activity-based costing is $3060000 $3638000 $1462000 $2040000

Answer 1

Answer:

The overhead applied to Supreme using ABC is computed as follows: Machining Overhead = (Machining overhead cost/Total number of machine hours) x Supreme machine hours Machining = ($3,400,000/40,000) x 30,000 Machining Overhead Applied = $2,550,000 Assembling = (Assembling overhead cost/Total number of parts) x Supreme number of parts Assembling Overhead = ($1,700,000/250,000) x 160,000 Assembling Overhead Applied = $1,088,000 Total overhead applied to Supreme = Machining Overhead Applied + Assembling Overhead Applied - Total overhead applied to Supreme = $2,550,000+ $1,088,000 - Total overhead applied to Supreme = $3,638,000 - Hence, the second option is correct.