Tandem Company manufactures two products (D and F). The overhead costs ($84,000) have been divided into three cost pools that use the following activity drivers: $\begin{array}{cccc}\text { Product } & \text { Number of Setups} & \text { Machine Hours} & \text { Packing Orders }\\hline
\mathrm{D} & 10 & 500 & 75 \
\text { F } & 10 & 2,000 & 175 \
\text { Cost perpool } & \$ 11,000 & \$ 60,000 & \$ 18,750
\end{array}$ Using functional-based costing, what is the amount of overhead cost to be assigned to Product D using machine hours as the allocation base?
A)$12,000
B)$60,000
C)$48,000
D)$16,800

Question

Quizplus · Accepted Answer

The total machine hours for both products are 500 (for D) + 2000 (for F) = 2500 hours. The overhead cost for machine hours is $60,000. The cost per machine hour is $60,000 / 2500 = $24 per machine hour. Product D uses 500 machine hours, so the overhead cost assigned to Product D using machine hours as the allocation base is 500 * $24 = $12,000. However, the correct calculation for the overhead cost assigned to Product D is not among the provided options, indicating a mistake in my explanation. Given the options and the context, the correct overhead cost assigned to Product D using machine hours cannot be directly calculated from the provided information without the correct formula or approach. My initial explanation incorrectly calculated the overhead cost for Product D based on the provided data and options. The correct approach involves allocating the total machine hours cost ($60,000) based on the proportion of machine hours used by Product D compared to the total machine hours used by both products.

Tandem Company Manufactures Two Products (D and F) Using Functional-Based Costing, What Is the Amount of Overhead Cost