(Answered) : Tech Inc.is a manufacturer that used traditional costing in the past, where overhead costs were allocated based on a single pred

Tech Inc.is a manufacturer that used traditional costing in the past, where overhead costs were allocated based on a single predetermined rate using machine hours. The company recently switched to an activity-based costing system using different cost drivers for each of their two activities. Tech Inc. has provided the following data concerning its annual overhead and its activity based costing system:

Activity Cost Pools Total Cost Total Activity Rate
Filling Orders $37,800 900 orders $42 per order
Order Size $300,000 25,000 machine hours $12 per machine hour
TOTAL $337,800
Product A requires 300 orders and 14,000 machine hours. What is the total overhead cost assigned to Product A using Activity Based Costing?

$180,600
$267,500
$189,168
$300,000

Expert Answer

Activity

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