Reference: 05-11
Andruschack Corporation Uses Activity-Based Costing to Determine Product

question 63

Multiple Choice

Reference: 05-11
Andruschack Corporation uses activity-based costing to determine product costs for external financial reports. Overapplied or underapplied overhead is closed to the Cost of Goods Sold account at the end of each year. The
company has provided the following data concerning its activity-based costing system: $$\begin{array}{l}\begin{array} { | l | l | } \hline \begin{array} { l } \text { Activity Cost Pools (and Activity } \\\text { Measures) }\end{array} & \text { Estimated Overhead Cost } \\\hline \text { Machine related (machine-hours) } & \$ 213,000 \\\hline \text { Batch setup (setups) } & \$ 339,000 \\\hline \text { General factory (direct labour-hours) } & \$ 193,200 \\\hline\end{array}\\\\\begin{array} { | l | l | l | l | } \hline & & { \text { Expected Activity } } \\\hline \text { Activity Cost Pools } & \text { Total } & \text { Product } X & \text { Product } Y \\\hline \text { Machine related } & 10,000 & 3,000 & 7,000 \\\hline \text { Batch setup } & 10,000 & 4,000 & 6,000 \\\hline \text { General factory } & 14,000 & 7,000 & 7,000 \\\hline\end{array}\end{array}$$
-Assuming that actual activity turns out to be the same as expected activity, the total amount of overhead cost allocated to Product X would be closest to:

• A)$339,000.
• B)$372,600.
• C)$296,100.
• D)$298,000.

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Definitions:

Task Difficulty

The level of effort and skill required to complete a task or achieve a goal.

Increased Workloads

This term describes situations where the quantity of work assigned to an individual or team exceeds the previous levels, often requiring more effort or time to complete.

Competence

The ability of an individual or organization to effectively perform or carry out a specific task or skill.

Kurt Lewin

A psychologist known for his contributions to social psychology, particularly his theories on group dynamics, leadership styles, and organizational change.