Problem-
Brisky Corporation uses activity-based costing to compute product margins. In the first stage, the activity-based costing system allocates two overhead accounts-equipment depreciation and supervisory expense-to three activity cost pools-Machining, Order Filling, and Other-based on resource consumption. Data to perform these allocations appear below:
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Overhead costs:
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Equipment depreciation
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$35,000
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|
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Supervisory expense
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$15,800
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Distribution of Resource Consumption Across Activity Cost Pools:
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Activity Cost Pools
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Machining
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Order Filling
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Other
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Equipment depreciation
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0.60
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0.30
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0.10
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Supervisory expense
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0.60
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0.20
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0.20
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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.
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Activity:
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MHs (Machining)
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Orders (Order Filling)
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Product I3
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5,760
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112
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Product U8
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20,800
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999
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Total
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26,560
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1,111
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Finally, sales and direct cost data are combined with Machining and Order Filling costs to determine product margins.
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Sales and Direct Cost Data:
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Product I3
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Product U8
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Sales (total)
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$70,400
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$61,400
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Direct materials (total)
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$36,200
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$22,100
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Direct labor (total)
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$17,200
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$34,400
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What is the overhead cost assigned to Product I3 under activity-based costing?
a. $30,480.00
b. $8,002.00
c. $6,624.00
d. $1,378.00
Additional Requirement-
The problem belongs to Basic Accounting and it discusses about calculation of overhead cost assigned to a product under activity-based costing.