Encarnacion Corporation Has an Activity-Based Costing System with Three Activity

question 114

Multiple Choice

Encarnacion Corporation has an activity-based costing system with three activity cost pools-Processing, Supervising, and Other. In the first stage allocations, costs in the two overhead accounts, equipment expense and indirect labor, are allocated to the three activity cost pools based on resource consumption. Data used in the first stage allocations follow: Processing costs are assigned to products using machine-hours (MHs) and Supervising costs are assigned to products using the number of batches. The costs in the Other activity cost pool are not assigned to products. Activity data for the company's two products follow:
Finally, the costs of Processing and Supervising are combined with the following sales and direct cost data to determine product margins.

-What is the overhead cost assigned to Product C6 under activity-based costing?

• A)$19,920
• B)$5,100
• C)$42,500
• D)$25,020

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Definitions:

Invoices

Documents issued by a seller to a buyer, detailing products or services provided, prices, terms of sale, and payment instructions.

Payroll Documents

Records related to the payment of employees, including details on wages, deductions, and hours worked.

Accounts Payable

The amount of money a company owes to its creditors for goods or services that have been delivered or used but not yet paid for.

Double-Entry Bookkeeping System

An accounting principle where each financial transaction is recorded in two accounts, ensuring the books are always balanced.