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.If the number of machine hours is used to assign machine hour cost,what is the amount of machine hour cost to be assigned to Product X?
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.If the number of machine hours is used to assign machine hour cost,what is the amount of machine hour cost to be assigned to Product X?
A)$12,000
B)$16,800
C)$48,000
D)$60,000

Quizplus · Accepted Answer

The machine hour cost pool is $60,000. Product X uses 500 machine hours out of a total of 2,500 machine hours (500 for X and 2,000 for Y). The cost assigned to Product X is ($60,000 * 500/2,500) = $12,000.

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