Jackson,Inc.produces two different products (Product 5 and Product Z)using two different activities: Machining,which uses machine hours as an activity driver,and Inspection,which uses number of batches as an activity driver.The cost of Machining is $500,000,while the cost of Inspection is $30,000.Product 5 uses 20% of total machine hours and 75% of total batches.What is the total Machining cost assigned to Product Z?
A)$7,500
B)$22,500
C)$375,000
D)$400,000

Question

Quizplus · Accepted Answer

Product Z would use the remaining percentage of machine hours after Product 5's usage is accounted for. Since Product 5 uses 20% of total machine hours, Product Z uses 80% (100% - 20%). The total Machining cost is $500,000, so Product Z's share is 80% of $500,000, which is $400,000.