Yang Manufacturing Company manufactures two products (A and B). The overhead costs ($58,000) have been divided into three cost pools that use the following activity drivers:
$\begin{array}{ccrr}
&&\text { Number of Labour }\
\underline{\text { Product }}&\underline{\text { Number of Orders }} & \underline{\text { Transactions }} & \underline{\text { Labour Hours }}\
\text { A } & 15 & 50 & 500 \
\text {B} & 10 & 150 & 2,000 \\
\text { Cost per pool } & \$ 10,000 & \$ 8,000 & \$ 40,000
\end{array}$

-Refer to the figure.If the number of labour hours is used to assign labour costs from the cost pool,what is the amount of overhead cost to be assigned to Product A?
A)$8,000
B)$9,600
C)$32,000
D)$58,000

Question

Yang Manufacturing Company manufactures two products (A and B). The overhead costs ($58,000) have been divided into three cost pools that use the following activity drivers:
$\begin{array}{ccrr}
&&\text { Number of Labour }\
 \underline{\text { Product }}&\underline{\text { Number of Orders }} & \underline{\text { Transactions }} & \underline{\text { Labour Hours }}\
\text { A } & 15 & 50 & 500 \
\text {B} & 10 & 150 & 2,000 \\
\text { Cost per pool } & \$ 10,000 & \$ 8,000 & \$ 40,000
\end{array}$

-Refer to the figure.If the number of labour hours is used to assign labour costs from the cost pool,what is the amount of overhead cost to be assigned to Product A?
A)$8,000
B)$9,600
C)$32,000
D)$58,000

Quizplus · Accepted Answer

The overhead cost assigned to Product A is calculated based on the proportion of labour hours used by Product A. Product A uses 500 out of a total 2,500 labour hours (500 for A + 2,000 for B). The cost pool for labour is $40,000. Therefore, the overhead cost assigned to Product A is $(500/2500) \times 40,000 = 8,000$.

Yang Manufacturing Company Manufactures Two Products (A and B) -Refer to the Figure