Reference: 05-07
Alam Company Uses Activity-Based Costing to Compute Product

Reference: 05-07
Alam Company uses activity-based costing to compute product costs for external reports. The company has three activity cost pools and applies overhead using predetermined overhead rates for each activity cost pool. Overapplied or underapplied overhead is closed to the Cost of Goods Sold account at the end of each year. Estimated costs and activities for the current year are presented below for the three activity cost pools: $$\begin{array}{l}\begin{array} { | l | l | l | } \hline & \text { Estimated Overhead Cost } & \text { Expected Activity } \\\hline \text { Activity 1 } & \$ 29,328 & 1,200 \\\hline \text { Activity 2 } & \$ 30,024 & 2,400 \\\hline \text { Activity 3 } & \$ 65,142 & 2,200 \\\hline\end{array}\\\text { Actual costs and activities for the current year were as follows: }\\\begin{array} { | l | l | l | } \hline & \text { Actual Overhead Cost } & \text { Actual Activity } \\\hline \text { Activity 1 } & \$ 29,238 & 1,185 \\\hline \text { Activity 2 } & \$ 29,899 & 2,415 \\\hline \text { Activity 3 } & \$ 65,117 & 2,225 \\\hline\end{array}\end{array}$$
-The total credits to the Manufacturing Overhead account during the year were closest to:

A) $125,055.
B) $124,494.
C) $125,667.
D) $124,254.

Correct Answer:

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