Pearson Brothers recently reported a switch to activity-based costing (ABC) from the department allocation method. The department method allocated overhead costs at a rate of $50 per machine hour. The manager for the Finishing Department has gathered the following data: Activity Material handling Machine setups Utilities Quality control 0 0 0 During May, Pearson purchased and used $120,000 of direct materials at $10 per ton. There were eight (8) production runs using a total of 13,000 machine hours in May. The manager of the Finishing Department needed 12 inspections. Actual overhead costs totaled $840,000 for the month. Using ABC, how much overhead costs were applied to the Work-in-Process Inventory during May? O $650,000. Cost Drivers Tons of material handled Number of production runs Machine hours Number of Inspections O $947,600. O$840,000. Amount $60 3,400 15 $ 450
Pearson Brothers recently reported a switch to activity-based costing (ABC) from the department allocation method. The department method allocated overhead costs at a rate of $50 per machine hour. The manager for the Finishing Department has gathered the following data: Activity Material handling Machine setups Utilities Quality control 0 0 0 During May, Pearson purchased and used $120,000 of direct materials at $10 per ton. There were eight (8) production runs using a total of 13,000 machine hours in May. The manager of the Finishing Department needed 12 inspections. Actual overhead costs totaled $840,000 for the month. Using ABC, how much overhead costs were applied to the Work-in-Process Inventory during May? O $650,000. Cost Drivers Tons of material handled Number of production runs Machine hours Number of Inspections O $947,600. O$840,000. Amount $60 3,400 15 $ 450
Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter3: Process Cost Systems
Section: Chapter Questions
Problem 7BE: In October, the cost of materials transferred into the Rolling Department from the Casting...
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![Pearson Brothers recently reported a switch to activity-based costing (ABC) from the department allocation method. The department method allocated overhead costs at a rate of $50 per machine hour.
The manager for the Finishing Department has gathered the following data:
Activity
Material handling
Machine setups
Utilities
Quality control
O$650,000.
O$947,600.
During May, Pearson purchased and used $120,000 of direct materials at $10 per ton. There were eight (8) production runs using a total of 13,000 machine hours in May. The manager of the Finishing
Department needed 12 inspections. Actual overhead costs totaled $840,000 for the month.
Using ABC, how much overhead costs were applied to the Work-in-Process Inventory during May?
000
Cost Drivers
Tons of material handled
Number of production runs
Machine hours
Number of Inspections
$840,000.
O $942,600.
Amount
$ 60
3,400
15
$450](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F92388482-dda4-4799-a87c-9f7733c2725d%2F4e3f82ea-6944-4f20-a32e-b67d1b624b3e%2Fn7hhtgs_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Pearson Brothers recently reported a switch to activity-based costing (ABC) from the department allocation method. The department method allocated overhead costs at a rate of $50 per machine hour.
The manager for the Finishing Department has gathered the following data:
Activity
Material handling
Machine setups
Utilities
Quality control
O$650,000.
O$947,600.
During May, Pearson purchased and used $120,000 of direct materials at $10 per ton. There were eight (8) production runs using a total of 13,000 machine hours in May. The manager of the Finishing
Department needed 12 inspections. Actual overhead costs totaled $840,000 for the month.
Using ABC, how much overhead costs were applied to the Work-in-Process Inventory during May?
000
Cost Drivers
Tons of material handled
Number of production runs
Machine hours
Number of Inspections
$840,000.
O $942,600.
Amount
$ 60
3,400
15
$450
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