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: $\begin{array}{cccc}\text { Product } & \text { Number of Setups} & \text { Machine Hours} & \text { Packing Orders }\\hline
\mathrm{D} & 10 & 500 & 75 \
\text { F } & 10 & 2,000 & 175 \
\text { Cost perpool } & \$ 11,000 & \$ 60,000 & \$ 18,750
\end{array}$ If the number of machine hours is used to assign machine hour cost, determine the amount of machine hour cost to be assigned to Product D.
A)$12,000
B)$60,000
C)$48,000
D)$16,800

Question

Quizplus · Accepted Answer

The machine hour cost pool is $60,000. Product D uses 500 machine hours out of a total of 2,500 (500 for D + 2,000 for F). The cost assigned to Product D is $(500/2500) \times 60,000 = 12,000$.

Tandem Company Manufactures Two Products (D and F) If the Number of Machine Hours Is Used to Assign