Question

Theodore Company’s overhead rate for machine setups is $115 per setup. A total of 105 setups are estimated for the period. At year-end, it was determined that Products A and B have 60 and 45 setups, respectively. How much is the overhead cost assigned to each product?a. Product A $10,062.50, Product B $2,012.50 b. Not enough information to determine the answer c. Product A $6,037.50, Product B $6,037.50 d. Product A $6,900, Product B $5,175

Answer 1

Answer:

The answer is d. Product A $6,900, Product B $5,175

Explanation:

The overhead cost assigned to each product is the rate multiplied by  the number of setups.

The overhead assigned to product A is

$115 x 60 setups = $6,900

and the overhead assigned to product B is

$115 x 45 setups = $5,175.

Hence the answer is d. Product A $6,900, Product B $5,175