Meester Corporation has an activity-based costing system with three activity cost pools--Machining, Order Filling, and Other. In the first stage allocations, costs in the two overhead accounts, equipment depreciation and supervisory expense, are allocated to three activity cost pools based on resource consumption. Data used in the first stage allocations follow: Overhead costs: Equipment depreciation$ 78,000Supervisory expense$ 2,000 Distribution of Resource Consumption Across Activity Cost Pools: Activity Cost PoolsMachiningOrder FillingOtherEquipment depreciation0.400.100.50Supervisory expense0.500.100.40 Machining costs are assigned to products using machine-hours (MHs) and Order Filling costs are assigned to products using the number of orders. The costs in the Other activity cost pool are not assigned to products. Activity data for the company's two products follow: Activity: MHs (Machining)Orders (Order Filling)Product M01,000600Product H29,0001,400Total10,0002,000 How much overhead cost is allocated to the Order Filling activity cost pool under activity-based costing?Multiple Choice$28,980$5,600$8,000$40,000

Overhead cost is the amount of cost incurred on the making of the goods. It is shown in the cost…

Answered: Meester Corporation has an…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Meester Corporation has an activity-based costing system with three activity cost pools--Machining, Order Filling, and Other. In the first stage allocations, costs in the two overhead accounts, equipment depreciation and supervisory expense, are allocated to three activity cost pools based on resource consumption. Data used in the first stage allocations follow:

Overhead costs:
Equipment depreciation	$ 78,000
Supervisory expense	$ 2,000

Distribution of Resource Consumption Across Activity Cost Pools:

	Activity Cost Pools
Machining	Order Filling	Other
Equipment depreciation	0.40	0.10	0.50
Supervisory expense	0.50	0.10	0.40

Machining costs are assigned to products using machine-hours (MHs) and Order Filling costs are assigned to products using the number of orders. The costs in the Other activity cost pool are not assigned to products. Activity data for the company's two products follow:

Activity:

	MHs (Machining)	Orders (Order Filling)
Product M0	1,000	600
Product H2	9,000	1,400
Total	10,000	2,000

How much overhead cost is allocated to the Order Filling activity cost pool under activity-based costing?

Multiple Choice

$28,980

$5,600

$8,000

$40,000

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