Mcnamee Corporation's Activity-Based Costing System Has Three Activity Cost Pools--Fabricating

question 354

Essay

Mcnamee Corporation's activity-based costing system has three activity cost pools--Fabricating, Setting Up, and Other. Costs in the Fabricating cost pool are assigned to products based on machine-hours (MHs) and costs in the Setting Up cost pool are assigned to products based on the number of batches. Costs in the Other cost pool are not assigned to products. The activity rate for Fabricating is $0.14 per machine-hour; the activity rate for Setting Up is $3.30 per batch. The following table shows the machine-hours and number of batches associated with each of the company's two products:
Required:Determine the amount of overhead cost that would be assigned to each product using activity-based costing.

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Definitions:

Intensity

The degree of strength, force, or concentration applied in a specific activity or situation.

Selective Screening

The cognitive process through which people filter and focus on important informational cues while ignoring other less relevant data.

External Environment

Factors outside an organization that can affect its performance and strategies, including economic, social, political, and technological influences.

Reality

The state of things as they actually exist, as opposed to an idealistic or notional idea of them.