43) Bippus Corporation manufactures two products: Product X08R and Product P56L. Thecompany uses a plantwide overhead rate based on direct labor-hours. It is consideringimplementing an activity-based costing (ABC) system that allocates its manufacturing overheadto four cost pools. The following additional information is available for the company as a wholeand for Products X08R and P56L.Activity Cost PoolMachiningMachine setupsProduct designGeneral factoryActivity MeasureMachine-hoursNumber of setupsNumber of productsTotal Cost$247,000 13,000 MHs60,00024Total Activity150 setups56,000$260,000 10,000 DLHS2 productsDirect labor-hoursActivity MeasureMachine-hoursNumber of setupsNumber of productsProduct X08RProduct P56L10,0003,0001104011Direct labor-hours6,0004,000Using the plantwide overhead rate, how much manufacturing overhead cost would be allocatedto Product P56L?A) $311,500B) $373,800C) $249,200D) $418,000

Plantwide Overhead rate is equal to Total Budgeted Overhead divided by Total direct labour hours.

Answered: Activity Machin Number Number Direct la

Business

Accounting

Activity Machin Number Number Direct la

Financial And Managerial Accounting

15th Edition

ISBN:9781337902663

Author:WARREN, Carl S.

Publisher:WARREN, Carl S.

Chapter18: Activity-based Costing

Section: Chapter Questions

Problem 2PA: The management of Gwinnett County Chrome Company, described in Problem 1A, now plans to use the...

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Question

43) Bippus Corporation manufactures two products: Product X08R and Product P56L. The
company uses a plantwide overhead rate based on direct labor-hours. It is considering
implementing an activity-based costing (ABC) system that allocates its manufacturing overhead
to four cost pools. The following additional information is available for the company as a whole
and for Products X08R and P56L.
Activity Cost Pool
Machining
Machine setups
Product design
General factory
Activity Measure
Machine-hours
Number of setups
Number of products
Total Cost
$247,000 13,000 MHs
60,000
24
Total Activity
150 setups
56,000
$260,000 10,000 DLHS
2 products
Direct labor-hours
Activity Measure
Machine-hours
Number of setups
Number of products
Product X08R
Product P56L
10,000
3,000
110
40
1
1
Direct labor-hours
6,000
4,000
Using the plantwide overhead rate, how much manufacturing overhead cost would be allocated
to Product P56L?
A) $311,500
B) $373,800
C) $249,200
D) $418,000

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