Ironclad Tools Inc. expects to produce 20,000 total units during the current period. The costs and cost drivers associated with four activity cost pools are given below: Activities Cost Unit Level $28,000 Batch Level Product Level $40,000 $9,000 Facility Level $150,000 20,000 units Cost Driver 3,000 labor hrs. 200 set-ups % of use Production of 1,500 units of a precision drill bit required: • 600 labor hours • 15 setups • Consumed 40% of the product sustaining activities. How much total overhead cost will be allocated to this product if the company allocates overhead on the basis of a single overhead allocation rate based on direct labor hours?

Ironclad Tools Inc. expects to produce 20,000 total units during the current period. The costs and cost drivers associated with four activity cost pools are given below: Activities Cost Unit Level $28,000 Batch Level Product Level $40,000 $9,000 Facility Level $150,000 20,000 units Cost Driver 3,000 labor hrs. 200 set-ups % of use Production of 1,500 units of a precision drill bit required: • 600 labor hours • 15 setups • Consumed 40% of the product sustaining activities. How much total overhead cost will be allocated to this product if the company allocates overhead on the basis of a single overhead allocation rate based on direct labor hours?

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter6: Activity-based, Variable, And Absorption Costing

Section: Chapter Questions

Problem 2EA: Crystal Pools estimates overhead will utilize 250,000 machine hours and cost $750,000. It takes 2...

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