Addleman Corporation has an activity-based costing system with three activity cost pools-Processing, Supervising, and Other. In the first stage allocations, costs in the two overhead accounts, equipment expense and indirect labor, are allocated to the three activity cost pools based on resource consumption. Data used in the first stage allocations follow:Overhead costs: Equipment expense$73,000Indirect labor$1,000??Distribution of Resource Consumption Across Activity Cost Pools: Activity Cost Pools ProcessingSupervisingOtherEquipment expense0.200.100.70Indirect labor0.200.200.60Processing costs are assigned to products using machine-hours (MHs) and Supervising costs are assigned to products using the number of batches. The costs in the Other activity cost pool are not assigned to
products. Activity data for the company's two products follow:Activity: MHs (Processing)Batches (Supervising)Product W37,600100Product H32,400900Total10,0001,000Finally, the costs of Processing and Supervising are combined with the following sales and direct cost data to determine product margins.Sales and Direct Cost Data: Product W3Product H3Sales (total)$159,500$154,100Direct materials (total)$66,300$55,300Direct labor (total)$77,800$84,100How much overhead cost is allocated to the Supervising activity cost pool under activity-based costing?
A. $7,500
B. $200
C. $7,300
D. $51,700
Answer: A
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