Schwering Corporation Uses Activity-Based Costing to Assign Overhead Costs to Products.Overhead

question 36

Multiple Choice

Schwering Corporation uses activity-based costing to assign overhead costs to products.Overhead costs have already been allocated to the company's three activity cost pools as follows: Machining, $20, 800;Order Filling, $30, 400;and Other, $48, 800.Machining costs are assigned to products using machine-hours (MHs) and Order Filling costs are assigned to products using the number of orders.The costs in the Other activity cost pool are not assigned to products.Activity data appear below: What is the overhead cost assigned to Product U1 under activity-based costing?

• A)$20, 016
• B)$50, 000
• C)$6, 080
• D)$13, 936

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Definitions:

Net Present Value

A valuation method that calculates the current worth of a project or investment based on its estimated future cash flows, discounted back to the present.

Profitability Index

A financial metric used to measure the relative profitability of an investment, calculated as the present value of future cash flows divided by the initial investment cost.

Present Value

The value now of an amount that will be received in some future period.

Cash Inflows

Money received by a business from various sources, including sales, investments, financing, and more.