Reference: 05-07
Alam Company Uses Activity-Based Costing to Compute Product

question 37

Multiple Choice

Reference: 05-07
Alam Company uses activity-based costing to compute product costs for external reports. The company has three activity cost pools and applies overhead using predetermined overhead rates for each activity cost pool. Overapplied or underapplied overhead is closed to the Cost of Goods Sold account at the end of each year. Estimated costs and activities for the current year are presented below for the three activity cost pools: $$\begin{array}{l}\begin{array} { | l | l | l | } \hline & \text { Estimated Overhead Cost } & \text { Expected Activity } \\\hline \text { Activity 1 } & \$ 29,328 & 1,200 \\\hline \text { Activity 2 } & \$ 30,024 & 2,400 \\\hline \text { Activity 3 } & \$ 65,142 & 2,200 \\\hline\end{array}\\\text { Actual costs and activities for the current year were as follows: }\\\begin{array} { | l | l | l | } \hline & \text { Actual Overhead Cost } & \text { Actual Activity } \\\hline \text { Activity 1 } & \$ 29,238 & 1,185 \\\hline \text { Activity 2 } & \$ 29,899 & 2,415 \\\hline \text { Activity 3 } & \$ 65,117 & 2,225 \\\hline\end{array}\end{array}$$
-The total debits to the Manufacturing Overhead account during the year were closest to:

• A)$125,667.
• B)$124,494.
• C)$125,055.
• D)$124,254.

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Definitions:

Cheese Factory

A facility dedicated to the production and processing of cheese from milk.

Administration Route

The path by which a drug, fluid, poison, or other substance is brought into contact with the body.

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Unwanted, negative consequences associated with the use of a medical treatment or medication.