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

question 79

Essay

Tomek 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 $0.82 per MH; the activity rate for Setting Up is $5.40 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:

Old Machine

A piece of equipment that has been in use for a significant period and may be near or beyond its expected useful life.

Depletion

The allocation of the cost of a natural resource over its useful life as it is consumed or mined.

Ore Mined

The quantity of valuable mineral or material extracted from the earth.

Journal Entry

A record that details all the financial transactions of a company and their effect on accounts.