A Company Has Two Products: a and B

Essay

A company has two products: A and B.It uses activity-based costing and has prepared the following analysis showing budgeted costs and activities.Use this information to compute (a)the company's overhead rates for each of the three activities and (b)the amount of overhead allocated to Product A.
$\begin{array}{r}\text { Budgeted Activity }\quad\quad\quad\\\begin{array} { | l | c | r | r | r | } \hline & & { } \\ { \text { Activity Cost Pool } } & { \begin{array} { c } \text { Budgeted } \\\text { Overhead Cost }\end{array} } & \text { Product A } & \text { Product B } & { \text { Total } } \\\hline \text { Activity 1 } & \$ 160,000 & 400 & 1,600 & 2,000 \\\hline \text { Activity 2 } & \$ 110,000 & 2,000 & 1,000 & 3,000 \\\hline \text { Activity 3 } & \$ 180,000 & 1,200 & 10,800 & 12,000 \\\hline & & { } \\\hline \begin{array} { l } \text { Total budgeted } \\\text { overhead }\end{array} & \$ 450,000 & { } \\\hline\end{array}\end{array}$