Zipp Company manufactures two products (X and Y). The overhead costs ($84,000) have been divided into three cost pools that use the following activity drivers:
$$\begin{array} { l c c c }
\text { Product } & \text { Number of setups } & \text { Machine Hours } & \text { Packine Orders } \
\mathbf { X } & 10 & 500 & 75 \
Y & 10 & 2,000 & 175 \
\
\text { Cost per pod } & \$ 9,000 & \$ 60,000 & \$ 15,000
\end{array}$$
-Refer to the figure.Using functional-based costing,what is the amount of overhead cost to be assigned to Product X using machine hours as the allocation base?
A)$12,000
B)$16,800
C)$48,000
D)$60,000

Question

Zipp Company manufactures two products (X and Y). The overhead costs ($84,000) have been divided into three cost pools that use the following activity drivers:
$$\begin{array} { l c c c } 
\text { Product } & \text { Number of setups } & \text { Machine Hours } & \text { Packine Orders } \
\mathbf { X } & 10 & 500 & 75 \
Y & 10 & 2,000 & 175 \
\
\text { Cost per pod } & \$ 9,000 & \$ 60,000 & \$ 15,000
\end{array}$$
-Refer to the figure.Using functional-based costing,what is the amount of overhead cost to be assigned to Product X using machine hours as the allocation base?
A)$12,000
B)$16,800
C)$48,000
D)$60,000

Quizplus · Accepted Answer

The overhead cost to be assigned to Product X using machine hours as the allocation base is $16,800. This is calculated by multiplying the total overhead cost ($84,000) by the proportion of machine hours used by Product X (500 / 2,500 = 0.2).

Zipp Company Manufactures Two Products (X and Y) -Refer to the Figure