Question

Kiner Co. computed an overhead rate for machining costs ($520000) of $5 per machine hour. Machining costs are driven by machine hours. If computed based on direct labor hours, the overhead rate for machining costs would be $10 per direct labor hour. The company produces two products, Cape and Chap. Cape requires 62400 machine hours and 20000 direct labor hours, while Chap requires 41600 machine hours and 30000 direct labor hours. Using activity-based costing, machining costs assigned to each product is

Answer 1

Cape $312,000

Chap $208,000

Step-by-step explanation:

Calculation for the machining costs assigned to each product

Using this formula

Machining costs =Machine hours×Machine amount per hour.

Let plug in the formula

Cape= 62,400x $5per machine hour.

Cape=$312,000

Chap= 41,600x $5per machine hour.

Chap=$208,000

Therefore Using activity-based costing, machining costs assigned to each product is:

Cape $312,000

Chap $208,000