Umanzor Corporation uses activitybased costing to assign ove

Umanzor Corporation uses activity-based costing to assign overhead costs to products. Overhead costs have already been allocated to the company\'s three activity cost pools as follows: Processing, $50,500; Supervising, $28,600; and Other, $24,700. Processing costs are assigned to products using machine-hours (MHs) and Supervising costs are assigned to products using the number of batches. The costs in the Other activity cost pool are not assigned to products. Activity data appear below:

11,790            

1,930            

What is the overhead cost assigned to Product S5 under activity-based costing? (Round your intermediate calculations to 2 decimal places.)

a.$21,044.40

b. $67,696.40

c. $52,228.40

d. $46,652.00

Umanzor Corporation uses activity-based costing to assign overhead costs to products. Overhead costs have already been allocated to the company\'s three activity cost pools as follows: Processing, $51,500; Supervising, $35,800; and Other, $26,600. Processing costs are assigned to products using machine-hours (MHs) and Supervising costs are assigned to products using the number of batches. The costs in the Other activity cost pool are not assigned to products. Activity data appear below:

16,480            

1,880             

$2.81 per MH

$3.43 per MH

$3.13 per MH

$7.56 per MH

Umanzor Corporation uses activity-based costing to assign overhead costs to products. Overhead costs have already been allocated to the company\'s three activity cost pools as follows: Processing, $50,500; Supervising, $28,600; and Other, $24,700. Processing costs are assigned to products using machine-hours (MHs) and Supervising costs are assigned to products using the number of batches. The costs in the Other activity cost pool are not assigned to products. Activity data appear below:

Solution

Answer

Calculation of Activity Rate

No. of activity drivers

Overheads

Amount (A)

Activity driver

Product S5

Product F5

Total no of drivers (B)

Activity rate (A/B)

Processing

50500

MHs

10900

890

11790

4.28

Supervising

28600

Batches

1420

510

1930

14.82

Other

24700

N/A

0

0

N/A

Calculation of cost assigned on the basis of above Activity Rate

Product S5

Cost

Rate per driver

No of driver

Cost assigned

Processing

4.28

10900

46652

Supervising

14.82

1420

21044.4

Other

0

0

0

Total cost assigned

67696.4

Hence, the correct answer is $67696.40 (OPTION – B)

Calculation of Activity rate

No. of activity drivers

Overheads

Amount (A)

Activity driver

Product S5

Product F5

Total no of drivers (B)

Activity Rate (A/B)

Processing

51500

MHs

15300

1180

16480

3.125

Supervising

35800

Batches

1060

820

1880

19.04255

Other

26600

N/A

0

0

N/A

Since, the activity rate for PROCESSING is asked which is coming as $3.125 per MHs, the CORRECT ANSWER is OPTION – C $3.13 per MH as it is the closest to the figure calculated above.

			No. of activity drivers
Overheads	Amount (A)	Activity driver	Product S5	Product F5	Total no of drivers (B)	Activity rate (A/B)
Processing	50500	MHs	10900	890	11790	4.28
Supervising	28600	Batches	1420	510	1930	14.82
Other	24700	N/A	0	0	N/A