Reference: 05-14
Brooke Corporation Uses Activity-Based Costing to Determine Product

Reference: 05-14
Brooke Corporation uses activity-based costing to determine product costs for external financial reports. Activity rates computed at the beginning of the year are used to apply manufacturing overhead costs to products. The company has provided the following data concerning its activity-based costing system.
The data used to develop activity rates were: $$\begin{array} { | l | l | l | l | } \hline \text { Actrilty Cost Pools } & \begin{array} { l } \text { Estimated } \\\text { Overhead Cost }\end{array} & { \text { Expected Activity } } \\\hline \text { Machine related (machine-hours) } & \$ 777,400 & 26,000 & \text { MHs } \\\hline \text { Batch setup (setups) } & \$ 1,814,400 & 28,000 & \text { setups } \\\hline \begin{array} { l } \text { General factory (direct } \\\text { labour-hours) }\end{array} & \$ 478,800 & 18,000 & \text { DLHs } \\\hline \begin{array} { l } \text { The actual activity for the year } \\\text { was: }\end{array} & & & \\\hline & & \text { Actual Activity for the Year } \\\hline \text { Actrvity Cost Pools } & \text { Total } & \text { Product } X & \text { Product } Y \\\hline \text { Machine related (machine-hours) } & 28,000 & 17,000 & 11,000 \\\hline \text { Batch setup (setups) } & 28,000 & 7,000 & 21,000 \\\hline \begin{array} { l } \text { General factory (direct } \\\text { labour-hours) }\end{array} & 18,000 & 9,000 & 9,000 \\\hline\end{array}$$ The actual total manufacturing overhead cost incurred for the year was $3,064,400.
-If total overapplied or underapplied overhead is closed to the Cost of Goods Sol? account at the end of each year, the entry to Cost of Goods Sold would have been:

A) $33,000 credit.
B) $66,000 debit.
C) $33,000 debit.
D) $66,000 credit.

Correct Answer:

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