An activity based costing system is being considered at Nano GmbH to assign products overhead costs; these overhead costs are currently assigned strictly by number of units produced. First, the two overhead costs of Supervisory expense and Heating and Cooling expense would be allocated to three activity cost pools – Handling, Painting, and Other – based on resource consumption. The information used to perform these allocations is below:Overhead Costs:Supervisory expense: $1,600,000Heating and Cooling expense: $600,000Distritution of Resource Consumption across Activity Cost Pools:Overhead Cost Activity Cost PoolsHandling Painting OtherSupervisory expense 0.10 0.40 0.50Heating and Cooling expense 0.20 0.30 0.50In the second stage, Handling costs would be assigned to products using orders filled and Painting costs would be assigned to products using the number of direct labor hours. The costs in the Other activity pool would not be assigned to products. Activity data for the company’s two products is as follows:orders filled direct labor hours Units ProducedProduct BA-10: 10,500 11,500 9,400Product XR-9: 26,500 10,000 3,300Total: 37,000 21,500 12,700How much overhead cost would be assigned to the Painting activity cost pool under activity based costing in the first stage of allocation?Answer$820,000$760,000$280,000$160,000$60,000PART B:The activity rate for the Painting activity cost pool under activity based costing would be closest to:Answer$38.14$3.24$2.79$20.54$4.32PART C:To the nearest dollar, how would the overhead cost assigned to Product XR-9 change under activity based costing compared to their current accounting methods?There would be Answeran increasea decreaseno change in assigned overhead under activity based costing, and the amount of the change would be $Answer. (Enter 0 for amount if choosing ‘no change’ for the direction.)
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