A Company Uses Activity-Based Costing to Determine the Costs of Its

question 146

Multiple Choice

A company uses activity-based costing to determine the costs of its three products: A,B and C.The budgeted cost and activity for each of the company's three activity cost pools are shown in the following table:

How much overhead will be assigned to Product B using activity-based costing?

• A) $56,500
• B) $78,000
• C) $62,500
• D) $197,000
• E) $70,000

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Definitions:

Widgets

A generic term often used to refer to any product or manufactured item for examples or hypothetical situations.

Fixed Factory Overhead

The regular, consistent costs associated with operating a factory that do not vary with production volume, such as rent, salaries, and utilities.

Variable Factory Overhead

Costs of manufacturing that fluctuate with the level of production output, such as utilities and raw materials.

Total Factory Overhead Cost Variance

The difference between the actual overhead costs incurred and the standard overhead costs previously estimated for a production process.