The total overhead applied to Product B5 under activity-based costing is closest to:

A) $280,140
B) $365,924
C) $438,815
D) $329,120

Question

The total overhead applied to Product B5 under activity-based costing is closest to:A) $280,140B) $365,924C) $438,815D) $329,120

Yasmin Barahona · Accepted Answer

Final Answer : B, Explanation :  First, we need to calculate the overhead cost per unit of Product B5 using activity-based costing:Activity 1 cost per unit: ($48,000/8,000) = $6 per unitActivity 2 cost per unit: (($200,000 x 60%)/20,000) = $6 per unitActivity 3 cost per unit: (($400,000 x 40%)/10,000) = $16 per unitTotal overhead cost per unit = $6 + $6 + $16 = $28 per unitNext, we need to calculate the total overhead applied to Product B5:Total Product B5 units produced = 12,460Total overhead applied = 12,460 x $28 = $349,680However, the question is asking for the closest answer, so we look for the choice that is closest to $349,680. Choice B is the closest with a value of $365,924, making it the best choice. Computation of activity rates:   Computation of the overhead cost under activity-based costing.   Reference: CH04-Ref15Gesualdo, Inc., manufactures and sells two products: Product Z6 and Product F4.Data concerning the expected production of each product and the expected total direct labor-hours (DLHs)required to produce that output appear below:   The direct labor rate is $24.70 per DLH.The direct materials cost per unit for each product is given below:   The company is considering adopting an activity-based costing system with the following activity cost pools, activity measures, and expected activity:

The total overhead applied to Product B5 under activity-based costing is closest to:

A) $280,140
B) $365,924
C) $438,815
D) $329,120

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