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2 Jan 2018

7–5 What types of costs should not be assigned to products in an activity-based costing system?

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Deanna Hettinger
Deanna HettingerLv2
4 Jan 2018

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Related questions

Benoist Corporation has an activity-based costing system withthree activity cost pools-Machining, Setting Up, and Other. Thecompany's overhead costs have already been allocated to the costpools and total $17,200 for the Machining cost pool, $7,700 for theSetting Up cost pool, and $52,100 for the Other cost pool.

Costs in the Machining cost pool are assigned to products based onmachine-hours (MHs) and costs in the Setting Up cost pool areassigned to products based on the number of batches. Costs in theOther cost pool are not assigned to products. Data concerning thetwo products and the company's costs appear below:





Required:

a. Calculate activity rates for each activity cost pool usingactivity-based costing.
b. Determine the amount of overhead cost that would be assigned toeach product using activity-based costing.
c. Determine the product margins for each product usingactivity-based costing.

Lysiak Corporation uses an activity based costing system to assign overhead costs to products. In the first stage, two overhead costs--equipment depreciation and supervisory expense-are allocated to three activity cost pools--Machining, Order Filling, and Other--based on resource consumption. Data to perform these allocations appear below: Overhead costs: Equipment depreciation $ 47,000 Supervisory expense $ 6,000 Distribution of Resource Consumption Across Activity Cost Pools: Activity Cost Pools Machining Order Filling Other Equipment depreciation 0.60 0.10 0.30 Supervisory expense 0.60 0.20 0.20 In the second stage, Machining costs are assigned to products using machine-hours (MHs) and Order Filling costs are assigned to products using the number of orders. The costs in the Other activity cost pool are not assigned to products. Activity data for the company's two products follow: Activity: MHs (Machining) Orders (Order Filling) Product C9 6,900 200 Product U0 3,100 800 Total 10,000 1,000 What is the overhead cost assigned to Product C9 under activity-based costing?

  • $21,942
  • $23,122
  • $26,500
  • $1,180

Umanzor Corporation uses activity-based costing to assignoverhead costs to products. Overhead costs have already beenallocated to the company's three activity cost pools as follows:Processing, $52,100; Supervising, $30,100; and Other, $18,600.Processing costs are assigned to products using machine-hours (MHs)and Supervising costs are assigned to products using the number ofbatches. The costs in the Other activity cost pool are not assignedto products. Activity data appear below:

MHs(Processing) Batches(supervising)
Product S5 17,400 750
Product F5 900 1,030
Total

18,300

1,780

What is the overhead cost assigned to Product S5 underactivity-based costing?

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