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Miramar Industries manufactures two products: A and B. The manufacturing operation involves three overhead activities—production setup,...

Miramar Industries manufactures two products: A and B. The manufacturing operation involves three overhead activities—production setup, materials handling, and general factory activities. Miramar uses activity-based costing to allocate overhead to products. An activity analysis of the overhead revealed the following estimated costs and activity bases for these activities:

Activity Cost Activity Base
Production setup $250,000 Number of setups
Material handling 150,000 Number of parts
General overhead 80,000 Number of direct labor hours


Each product's total activity in each of the three areas are as follows:

Product A Product B
Number of setups 100 300
Number of parts 40,000 20,000
Number of direct labor hours 8,000 12,000


What is the overhead allocated to Product B using activity-based costing?

a.$292,500

b.$175,000

c.$285,500

d.$135,000

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