Reference no: EM132659732

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 $83,500

Supervisory expense $5,000

Distribution of Resource Consumption Across Activity Cost Pools:

Activity                  Cost Pools

Machining                Order                Filling                    Other

Equipment depreciation 0.40            0.30                    0.30

Supervisory expense 0.40              0.20                        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 Orders

(Machining) (Order Filling)

Product M0 1,370 1,160

Product H 29,420 1,750

Total 10,790 2,910

Problem 1: How much overhead cost is allocated to the Order Filling activity cost pool under activity-based costing?

Multiple Choice

Option 1: $26,050

Option 2: $15,663

Option 3: $30,898

Option 4: $60,450