An activity based costing system is used at Haldeman, SA to assign products overhead costs. First, the two overhead costs of Equipment depreciation and Water expense are allocated to three activity cost pools - Handling, Machining, and Other - based on resource consumption. The information used to perform these allocations is below: Overhead Costs: Equipment depreciation: $50,000 Water expense: $60,000 Distribution of Resource Consumption across Activity Cost Pools: Overhead Cost Activity Cost Pools Handling Machining Other Equipment depreciation 0.28 0.34 0.38 Water expense 0.32 0.22 0.46 The second stage of allocation is done by assigning the Handling costs to products on the basis of orders filled while products are assigned Machining costs based on machine hours. Costs assigned to the Other activity pool are not further assigned to products. Activity information for Haldeman's only two products is below: orders filled machine hours Product LS-157: 3,400 3,400 Product XR-2: 3,800 2,300 Total: 7,200 5,700 PART A: How much overhead cost is assigned to the Handling activity cost pool under activity based costing in the first stage of allocation? (33200, 29200, 16800, 14000, OR 13200) PART B: The activity rate for the Handling activity cost pool under activity based costing is closest to: (4.61, 2.32, 2.95, 3.86, OR 2.67) PART C: What is the overhead cost assigned to Product LS-157 under activity based costing? (33692, 18014, 15678, 36200, OR 27800)

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter4: Activity-based Costing

Section: Chapter Questions

Problem 5CE: Roberts Company produces two weed eaters: basic and advanced. The company has four activities:...

See similar textbooks

Related questions

Concept explainers

Question

An activity based costing system is used at Haldeman, SA to assign products overhead costs. First, the two overhead costs of Equipment depreciation and Water expense are allocated to three activity cost pools - Handling, Machining, and Other - based on resource consumption. The information used to perform these allocations is below:

Overhead Costs:

Equipment depreciation: $50,000
Water expense: $60,000

Distribution of Resource Consumption across Activity Cost Pools:

Overhead Cost	Activity Cost Pools
	Handling	Machining	Other
Equipment depreciation	0.28	0.34	0.38
Water expense	0.32	0.22	0.46

The second stage of allocation is done by assigning the Handling costs to products on the basis of orders filled while products are assigned Machining costs based on machine hours. Costs assigned to the Other activity pool are not further assigned to products. Activity information for Haldeman's only two products is below:

	orders filled	machine hours
Product LS-157:	3,400	3,400
Product XR-2:	3,800	2,300
Total:	7,200	5,700

PART A:

How much overhead cost is assigned to the Handling activity cost pool under activity based costing in the first stage of allocation? (33200, 29200, 16800, 14000, OR 13200)

PART B:

The activity rate for the Handling activity cost pool under activity based costing is closest to: (4.61, 2.32, 2.95, 3.86, OR 2.67)

PART C:

What is the overhead cost assigned to Product LS-157 under activity based costing? (33692, 18014, 15678, 36200, OR 27800)

Expert Solution

Step by step

Solved in 4 steps with 4 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions