Exercise 4-7 (Algorithmic) ABC Overhead Calculation

The Bouncy Baby Crib Mattress Company sells firm and extra-firm mattresses. The company's president, Anna Greer, has become interested in the possibility of improving company performance by more closely monitoring overhead costs. She has decided to adopt an activity-based costing system for the current year. Last year, the company incurred $2,390,000 in overhead costs related to the following activities:

Activity	Allocation Base	Overhead Cost
Materials processing	Number of parts	$1,600,000
Firmness testing	Number of tests	600,000
Customer calls	Number of customer calls	190,000

During the year, 100,000 parts were handled (80,000 for firm mattress and 20,000 for extra-firm mattresses), 20,000 firmness tests were conducted (13,500 for firm mattress and 6,500 for extra-firm), and 10,000 customer calls were answered (7,000 for firm and 3,000 for extra-firm).

Required:

A. On the basis of an activity-based approach, determine the total amount of overhead that should be assigned to firm and extra-firm mattresses.

Total Overhead
Firm mattress	$ ?
Extra-firm mattresses	$ ?

B. If a firm mattress requires five parts, two tests, and one customer call, then what amount of overhead should be assigned to that mattress? $ ?