Kiner Co Computed an Overhead Rate for Machining Costs ($500,000) of of $5

question 78

Short Answer

Kiner Co. computed an overhead rate for machining costs ($500,000) of $5 per machine hour. Machining costs are driven by machine hours. If computed based on direct labor hours, the overhead rate for machining costs would be $10 per direct labor hour. The company produces two products, Cape and Chap. Cape requires 60,000 machine hours and 20,000 direct labor hours, while Chap requires 40,000 machine hours and 30,000 direct labor hours. Using activity-based costing, machining costs assigned to each product is $\begin{array}{lll}&\text { Cape }&\text { Chap }\\\text { a. } & \$ 200,000 & \$ 300,000 \\\text { b. } & \$ 750,000 & \$ 250,000 \\\text { c. } & \$ 266,667 & \$ 233,333 \\\text { d. } & \$ 300,000 & \$ 200,000\end{array}$

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