Figure 4-8 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:

-Refer to Figure 4-8.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) $60,000
C) $48,000
D) $16,800

Question

Figure 4-8 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:
 
-Refer to Figure 4-8.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) $60,000 
C) $48,000 
D) $16,800

Quizplus · Accepted Answer

Machine hours are used as the allocation base, and Product X has 1,200 machine hours. The overhead cost is $60,000, so the amount of overhead cost to be assigned to Product X is $60,000 * 1,200 / 4,000 = $16,800.

Figure 4-8 Zipp Company Manufactures Two Products (X and Y)