Mcnamee Corporation's Activity-Based Costing System Has Three Activity Cost Pools--Fabricating
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.
Definitions:
Interest Rate
The percentage at which interest is charged or paid on borrowed funds, typically expressed as an annual percentage rate.
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