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ABC Practice Problems with Solutions - Barnes Corporation...

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Barnes Corporation manufactures two models of office chairs, a standard and a deluxe model.The following activity and cost information has been compiled:Number ofNumber ofNumber ofProductSetupsComponentsDirect Labor HoursStandard228375Deluxe2812225Overhead costs$20,000$40,000Assume a traditional costing system applies the $60,000 of overhead costs based on direct laborhours. What is the total amount of overhead costs assigned to the standard model?A) $24,800B) $35,200C) $37,500D) $22,500Answer:Explanation:C) [$60,000 / (375 + 225)] × 375 = $37,500C
Assume a traditional costing system applies the $60,000 of overhead costs based on direct laborhours. What is the total amount of overhead costs assigned to the deluxe model?D
Number of setups and number of components are identified as activity-cost drivers for overhead.Assuming an activity-based costing system is used, what is the total amount of overhead costsassigned to the standard model?A

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Term
Spring
Professor
Welsh
Tags
overhead costs, DLH

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