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.Using functional-based costing,what is the amount of overhead cost to be assigned to Product B using labour hours as the allocation base?
A)$11,600
B)$43,500
C)$46,400
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.Using functional-based costing,what is the amount of overhead cost to be assigned to Product B using labour hours as the allocation base?
A)$11,600
B)$43,500
C)$46,400
D)$58,000

Quizplus · Accepted Answer

The overhead cost assigned to Product B using labour hours as the allocation base is calculated by dividing the total labour hours for Product B by the total labour hours for both products, then multiplying by the total overhead cost. Product B has 2,000 labour hours out of a total of 2,500 (500 for A + 2,000 for B). Thus, the allocation is (2,000/2,500) * $58,000 = $46,400.

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