21) The Mega Construction Company recently switched to activity-based costing (ABC) from the...
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Accounting
21)
The Mega Construction Company recently switched to activity-based costing (ABC) from the department allocation method. The department method allocated overhead costs at a rate of $60 per machine hour. The cost accountant for the Finishing Department has gathered the following data:
Activity Cost Drivers Rate
Material handling Tons of material handled $80
Machine setups Number of production runs 3,750
Utilities Machine hours 25
Quality control Number of inspections $500
During April, Mega purchased and used $100,000 of direct materials at $20 per ton. There were 8 production runs using a total of 12,000 machine hours in April. The manager of the Finishing Department needed 12 inspections. Actual overhead costs totaled $820,000 for the month.
How much overhead costs were applied to the Work-in-Process Inventory during April using activity-based costing?
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