Company manufactures and distributes two products, R and S. Overhead costs are currently allocated using the number of units produced as the allocation base. The controller has recommended changing to an activity-based costing (ABC) system. She has collected the following information.
Activity Cost Driver Amount R S
Production setups Number of setups $ 82,000 8 12
Material handling Number of parts 48,000 56 24
Packaging costs Number of units 130,000 80,000 50,000
Total amount $260,000
What is the total overhead allocated to Product R using the current system?
a. $113,600
b. $130,000
c. $160,000
What is the total overhead allocated to Product S using the current system?
a. $100,600
b. $146,400
c. $160,000