Answered: Meester Corporation has an…

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter4: Activity-based Costing

Section: Chapter Questions

Problem 5PA: Allocating selling and administrative expenses using activity-based costing Arctic Air Inc....

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Meester Corporation has an activity-based costing system with three activity cost pools--Machining, Order Filling, and Other. In the first stage allocations, costs in the two overhead accounts, equipment depreciation and supervisory expense, are allocated to three activity cost pools based on resource consumption. Data used in the first stage allocations follow:

Overhead costs:
Equipment expense	$ 81,300
Supervisory expense	$ 2,200

Distribution of Resource Consumption Across Activity Cost Pools:

	Activity Cost Pools
Machining	Order Filling	Other
Equipment expense	0.50	0.30	0.20
Supervisory expense	0.50	0.20	0.30

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 M0	1,630	1,370
Product H2	9,780	1,630
Total	11,410	3,000

What is the overhead cost assigned to Product H2 under activity-based costing?

Meester Corporation has an activity-based costing system with three activity cost pools--Machining, Order Filling, and Other. In the first stage allocations, costs in the two
overhead accounts, equipment depreciation and supervisory expense, are allocated to three activity cost pools based on resource consumption. Data used in the first stage
allocations follow:
Overhead costs:
Equipment expense
Supervisory expense
$ 81,300
$ 2,200
Distribution of Resource Consumption Across Activity Cost Pools:
Activity Cost Pools
Order Filling
Machining
Other
Equipment expense
Supervisory expense
0.50
0.30
0.20
0.50
0.20
0.30
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:
Orders (Order
MHs (Machining)
Filling)
Product MO
1,630
1,370
Product H2
9,780
1,630
Total
11,410
3,000
What is the overhead cost assigned to Product H2 under activity-based costing? (Round your intermediate calculations to 2 decimal places.)

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