One of Matheny Company's activity cost pools is inspecting, with estimated overhead of $200,000. Matheny produces throw rugs (700 inspections) and area rugs (1,300 inspections). How much of the inspecting cost pool should be assigned to throw rugs?
A) $70,000.
B) $100,000.
C) $107,692.
D) $200,000.

Question

Quizplus · Accepted Answer

The inspecting cost pool should be assigned based on the proportion of inspections each product requires. Throw rugs require 700 out of a total of 2,000 inspections (700 for throw rugs + 1,300 for area rugs). Therefore, the cost assigned to throw rugs is $200,000 * (700/2000) = $70,000.

One of Matheny Company's Activity Cost Pools Is Inspecting, with Estimated