One of Stine Company's activity cost pools is machine setups, with estimated overhead of $360,000. Stine produces sparklers (400 setups) and lighters (600 setups). How much of the machine setup cost pool should be assigned to sparklers?
A) $360,000
B) $144,000
C) $180,000
D) $216,000

Question

Quizplus · Accepted Answer

The machine setup cost pool should be assigned based on the number of setups for each product. 
Sparklers account for 400 setups out of a total of 1,000 setups (400 + 600). 
Therefore, the amount assigned to sparklers would be 40% of the total estimated overhead for the machine setup cost pool: 
$360,000 x 0.40 = $144,000.

One of Stine Company's Activity Cost Pools Is Machine Setups