Meester Corporation has an activity-based costing system with three activity cost pools--Machining, Order Filling, and...
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Accounting
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 depreciation
$
96,000
Supervisory expense
$
8,000
Distribution of Resource Consumption Across Activity Cost Pools:
Activity Cost Pools
Machining
Order Filling
Other
Equipment depreciation
0.30
0.10
0.60
Supervisory expense
0.60
0.10
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
4,500
400
Product H2
5,500
600
Total
10,000
1,000
What is the overhead cost assigned to Product H2 under activity-based costing?
Multiple Choice
$24,720
$6,240
$18,480
$52,000
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