Question

28. One of Stine Company's activity cost pools is machine setups, with estimated overhead of $360,000. Stine produces sparklers (400 setups) and lighters (600 setups). How much of the machine setup cost pool should be assigned to sparklers? A) $360,000 B) $144,000 C) $180,000 D) $216,000

Answer 1

Answer:
	Apportionment of Machine Setup cost to Sparklers
	Total Overhead Cost		$ 3,60,000
	Total production of Stine
		Sparklers	400(setups)
		Lighters	600(setups)
			1000
	Total Machine setup cost pool that should be assigned to Sparklers is:
		=	$3,60,000*400/1000
		=	1,44,000
	Total Machine setup cost pool that should be assigned to Lighters is:
		=	$3,60,000*600/1000
		=	2,16,000