Question

20) Tigerwoods, Inc produces two different products (product T and product W) using two different activities. Machining which uses machine hours and inspection that uses a number of batched are respective cost drivers. The activity rate for the machining is $250 per machine hour and $750 per batch for inspection. The activity drivers are used as following:
Product T Product W Total
Machine hours 1000 3000 4000
Number of batches 45 15 60

What is the amount of Machining costs assigned to Product W?
A. 33,750
B 750,000
C. 250,000
D. 11,250

And what is the amount of inspection costs assigned to Product T?
A. 33,750
B. 750,000
C. $250,000
D. 11,250

Answer 1

The amount of Machining costs assigned to Product W

The amount of Machining costs assigned to Product W = Machine Hours x Machining cost per machine hours

= 3,000 Machine Hours x $250 per Machine hours

= $750,000

“The amount of Machining costs assigned to Product W = (B). $750,000”

The amount of inspection costs assigned to Product T

The amount of inspection costs assigned to Product T = Number of Batches x Inspection cost per batches

= 45 Batches x $750 per batch

= $33,750

“The amount of inspection costs assigned to Product T = (A). $33,750”