The cost pool,Machine Set-ups,has estimated overhead of $120 000.The machines in the pool produce two products,X (200 set-ups)and Y (400 set-ups).The amount of machine set-up costs that should be allocated to product Y is:
A)$80 000
B)$60 000
C)$40 000
D)$120 000

Question

Quizplus · Accepted Answer

The total set-ups are 600 (200 for X and 400 for Y). The cost allocated to Y is (400/600) * $120,000 = $80,000.

The Cost Pool,Machine Set-Ups,has Estimated Overhead of $120 000