Bartow Corporation Uses an Activity Based Costing System to Assign

question 187

Multiple Choice

Bartow Corporation uses an activity based costing system to assign overhead costs to products. In the first stage, two overhead costs--equipment expense and indirect labor--are allocated to the three activity cost pools--Processing, Supervising, and Other--based on resource consumption. Data to perform these allocations appear below: Distribution of Resource Consumption Across Activity Cost Pools:
In the second stage, Processing costs are assigned to products using machine-hours (MHs) and Supervising costs are assigned to products using the number of batches. The costs in the Other activity cost pool are not assigned to products. Activity data for the company's two products follow:
Activity:
How much overhead cost is allocated to the Processing activity cost pool under activity-based costing in the first stage of allocation?

• A) $5,800
• B) $9,800
• C) $4,000
• D) $7,400

---

Definitions:

Unearned Revenues

Monies received by a company for goods or services yet to be delivered or performed, considered a liability until the obligation is fulfilled.

Liability

Financial obligations or debts that an entity owes to others, which must be settled over time through the transfer of economic benefits.

Customer Payment

Payment made by a customer for goods or services provided, typically recorded as revenue by the receiving business.

Equity Account

An account that represents the owner's or shareholders' residual interest in the assets of a company after deducting liabilities.