Reference: 05-14
Brooke Corporation Uses Activity-Based Costing to Determine Product

question 2

Multiple Choice

Reference: 05-14
Brooke Corporation uses activity-based costing to determine product costs for external financial reports. Activity rates computed at the beginning of the year are used to apply manufacturing overhead costs to products. The company has provided the following data concerning its activity-based costing system.
The data used to develop activity rates were: $$\begin{array} { | l | l | l | l | } \hline \text { Activity Cost Pools } & \begin{array} { l } \text { Estimated } \\\text { Overhead Cost }\end{array} & { \text { Expected Activity } } \\\hline \text { Machine related (machine-hours) } & \$ 777,400 & 26,000 & \text { MHs } \\\hline \text { Batch setup (setups) } & \$ 1,814,400 & 28,000 & \text { setups } \\\hline \begin{array} { l } \text { General factory (direct } \\\text { labour-hours) }\end{array} & \$ 478,800 & 18,000 & \text { DLHs } \\\hline \begin{array} { l } \text { The actual activity for the year } \\\text { was: }\end{array} & & &\\\hline & & \text { Actual Activity for the Year } \\\hline \text { Activity Cost Pools } & \text { Total } & \text { Product X } & \text { Product } Y \\\hline \text { Machine related (machine-hours) } & 28,000 & 17,000 & 11,000 \\\hline \text { Batch setup (setups) } & 28,000 & 7,000 & 21,000 \\\hline \begin{array} { l } \text { General factory (direct } \\\text { labour-hours) }\end{array} & 18,000 & 9,000 & 9,000 \\\hline\end{array}$$ The actual total manufacturing overhead cost incurred for the year was $3,064,400.
-The total amount of overhead cost allocated to Product X during the year would be closest to:

• A)$1,535,000.
• B)$768,000.
• C)$1,201,300.
• D)$1,814,000.

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