How much overhead cost will be assigned to the ice cream sandwich product line using activity-based costing (ABC) ?

A) $340,000
B) $368,000
C) $28,000
D) $850.08
E) $433,682

Question

How much overhead cost will be assigned to the ice cream sandwich product line using activity-based costing (ABC) ?A) $340,000B) $368,000C) $28,000D) $850.08E) $433,682

Suman Chander · Accepted Answer

Final Answer : B, Explanation :  Using activity-based costing, the ice cream sandwich product line would be assigned overhead costs based on the following activities and their corresponding costs:Activity 1: Material handlingCost: $50,000Activity 2: Mixing and freezingCost: $180,000Activity 3: Packaging and inspectingCost: $138,000Activity 4: General factoryCost: $50,000Using the activity rates for each activity, we can calculate the overhead costs assigned to the ice cream sandwich product line as follows:Activity 1:Ice cream sandwiches use 10% of material handling resources = $5,000Activity 2:Ice cream sandwiches use 40% of mixing and freezing resources = $72,000Activity 3:Ice cream sandwiches use 30% of packaging and inspecting resources = $41,400Activity 4:Ice cream sandwiches use 20% of general factory resources = $10,800Total overhead cost assigned to ice cream sandwich product line = $5,000 + $72,000 + $41,400 + $10,800 = $129,200Adding this amount to the direct costs for the ice cream sandwich product line ($238,800) gives a total cost of $368,000. Hence, the answer is B.

How much overhead cost will be assigned to the ice cream sandwich product line using activity-based costing (ABC) ?

A) $340,000
B) $368,000
C) $28,000
D) $850.08
E) $433,682

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