Canterra Co Using ABC, How Much Overhead Is Assigned to Product Two

question 36

Multiple Choice

Canterra Co.incurs $160,000 of overhead costs each year in its three main departments, setup ($10,000) , machining ($110,000) , and packing ($40,000) .The setup department performs 40 setups per year, the machining department works 5,000 hours per year, and the packing department packs 500 orders per year.Information about Canterra's 2 products is as follows: $$\begin{array} { l r r } & \text { Product One } & \text { Product Two } \\\text { Number of setups } & 20 & 20 \\\text { Machining hours } & 1,000 & 4,000 \\\text { Orders packed } & 150 & 350 \\\text { Number of product } & & \\\text { Manufactured } & 600 & 400\end{array}$$ Using ABC, how much overhead is assigned to Product Two each year?

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Definitions:

Work in Process

Inventory that includes all the materials, labor, and overhead costs for products that are in the production process but not yet complete.

FOH Budget Variance

is the difference between the budgeted factory overhead costs and the actual overhead costs incurred.

FOH Volume Variance

A measure used in accounting to describe the difference between the budgeted and actual volume of production, affecting fixed overhead costs.

Standard Cost Variances

Differences between the actual costs incurred and the standard costs that were expected or budgeted, used for budget control and financial analysis.