One of Hatch Company's activity cost pools is machine setups, with estimated overhead of $300,000.Hatch produces sparklers (400 setups) and lighters (600 setups).How much of the machine setup cost pool should be assigned to sparklers?

Question

Quizplus · Accepted Answer

The machine setup cost is allocated based on the number of setups. Sparklers have 400 setups out of a total of 1000 setups (400 for sparklers + 600 for lighters). Therefore, the cost assigned to sparklers is (400/1000) * $300,000 = $120,000.

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