Berry Co. produces a variety of scissors and other cutting instruments at its Rome manufacturing plant. The plant is highly automated and uses an activity-based costing system to allocate overhead costs to its various product lines. The company expects to produce 24,000 total units during the current period. The costs and cost drivers associated with four activity cost pools are given below:

ACTIVITIES: UNIT BATCH PRODUCT FACILITY
LEVEL LEVEL LEVEL LEVEL
Cost $70,000 ? $23,000 $240,000
Cost Driver 5,000 labor hrs 120 set ups % of use 30,000 units

Production of 2,000 units of a pipe-cutting tool required 600 labor hours, 16 setups, and consumed 35 % of the product sustaining activities and resulted in an overhead allocation of $34,850. What amount of batch-level overhead costs was expected during the period? (Do not round intermediate calculations.)
a. $2,400
b. $18,000
c. $32,450
d. None of these answers is correct.

Respuesta :

Answer:

Explanation:

the solution to the problem is shown in the file attached below

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The amount of batch-level overhead costs expected by Berry Co is $138,000.

Data and Calculations:

Expected production output = 24,000 units

ACTIVITIES:     UNIT               BATCH        PRODUCT          FACILITY

                       LEVEL               LEVEL             LEVEL               LEVEL

Cost            $70,000                   ?               $23,000          $240,000

Cost Driver   5,000 labor hrs  120 set ups   % of use        30,000 units

Usage for 2,000 units

Actual use     600 labor hrs     16 setups       35%               2,000 units

Total overhead allocated  for 2,000 units = $34,850

Overhead for 2,000 units:

Unit level overhead = $8,400 ($70,000/5,000 x 600)

Product-level overhead = $8,050 ($23,000 x 35%)

Total overhead allocated = $34,850

Batch-level overhead for 2,000 units = $18,400 ($34,850 - $8,400 - $8,050)

Thus, the amount of batch-level overhead costs expected by Berry Co is $138,000 ($18,400/16 x 120).

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