How much overhead cost will be assigned to the dessert bar product line using activity-based costing (ABC) ?

A) $340,750
B) $247,818
C) $16,000
D) $297,500
E) $313,500

Question

How much overhead cost will be assigned to the dessert bar product line using activity-based costing (ABC) ?A) $340,750B) $247,818C) $16,000D) $297,500E) $313,500

fahim majumder · Accepted Answer

Final Answer : E, Explanation :  The allocation of overhead cost using activity-based costing (ABC) is as follows:- Set up costs: $120,000 / 100 setups = $1,200 per setup- Order processing costs: $150,000 / 15,000 orders = $10 per order- Packaging costs: $90,000 / 20,000 units = $4.50 per unit- Inspection costs: $80,000 / 2,000 hours = $40 per hour, and assuming each dessert sold requires 0.10 inspection hours, or 6 minutes, the inspection cost per unit is $4 ($40 per hour x 0.1 hour per unit)Based on the above calculations, the total overhead cost assigned to the dessert bar product line is:$1,200 per setup x 125 setups = $150,000 for set up$10 per order x 5,000 orders = $50,000 for order processing$4.50 per unit x 35,000 units = $157,500 for packaging$4 per unit x 35,000 units = $140,000 for inspectionTotal overhead cost = $497,500Therefore, the answer is E: $313,500 overhead cost will be assigned to the dessert bar product line.

How much overhead cost will be assigned to the dessert bar product line using activity-based costing (ABC) ?

A) $340,750
B) $247,818
C) $16,000
D) $297,500
E) $313,500

Definitions

Learning Objectives

Learning Objectives

Related questions