Kulka Corporation manufactures two products: Product F82D and Product T05P. The company uses a plantwide overhead rate based on direct labor-hours. It is considering implementing an activity-based costing (ABC) system that allocates its manufacturing overhead to four cost pools. The following additional information is available for the company as a whole and for Products F82D and T05P.

Question

Business

Crystal Hodges

22 November, 01:58

Kulka Corporation manufactures two products: Product F82D and Product T05P. The company uses a plantwide overhead rate based on direct labor-hours. It is considering implementing an activity-based costing (ABC) system that allocates its manufacturing overhead to four cost pools. The following additional information is available for the company as a whole and for Products F82D and T05P.

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Belinda Roth · Answer 1

Total manufacturing overhead cost for T05P $303,000

Explanation:

Using the ABC system, the amount of total manufacturing overhead cost would be assigned to Product T05P is:

1. 4,000 / 9,000 machine hours x $180,000 ... $80,000

2. 90 / 250 set ups x $125,000 ... $45,000

3. 1 / 2 products x $44,000 ... $22,000

4. 6,000 / 10,000 labor hours x $260,000 ... $156,000

Total manufacturing overhead cost for T05P $303,000