Kawaii Corporation manufactures two products: Kawaii Pens and Kawaii Pencils. It is considering changing to...
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Accounting
Kawaii Corporation manufactures two products: Kawaii Pens and Kawaii Pencils. It is considering changing to an activity-based costing (ABC) system where manufacturing overhead costs will be put into four cost pools. The company currently uses a plantwide overhead rate based on direct labor-hours. The following additional information is available for the Kawaii Pens and Kawaii Pencils as well as all of Kawaii Corporation.
Activity Cost Pool
Activity Measure
Total Cost
Total Activity
Machining
Machine-hours
$
247,000
13,000
MHs
Machine setups
Number of setups
$
60,000
150
setups
Product design
Number of products
$
56,000
2
products
Order size
Direct labor-hours
$
260,000
10,000
DLHs
Activity Measure
Kawaii Pens
Kawaii Pencils
Machine-hours
10,000
3,000
Number of setups
110
40
Number of products
1
1
Direct labor-hours
6,000
4,000
Using the plantwide overhead rate, how much manufacturing overhead cost would be allocated to Kawaii Pencils?
Question 11 options:
$249,200
$311,500
$373,800
$418,000
Answer & Explanation
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