The estimated overhead for the cost pool,machine set-ups,is $180 000.The machines in the pool produce three products: X (300 set-ups); Y (200 set-ups)and Z (500 set-ups).The amount of machine set-up costs that should be allocated to product Y is:
A) $36 000
B) $90 000
C) $54 000
D) $180 000

Question

Quizplus · Accepted Answer

The total number of set-ups is 1000 (300 for X + 200 for Y + 500 for Z). The cost per set-up is $180,000 / 1000 = $180. For product Y, with 200 set-ups, the cost is 200 * $180 = $36,000.

The Estimated Overhead for the Cost Pool,machine Set-Ups,is $180 000