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.What is the allocation rate per setup using activity-based costing?

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.What is the allocation rate per setup using activity-based costing?

Quizplus · Accepted Answer

The total cost for setups is $9,000. There are 20 setups in total (10 for X and 10 for Y). Therefore, the allocation rate per setup is $9,000 / 20 = $450.

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