Question

The overhead rate for machine setups is $100 per setup. Products A and B have 80 and 60 setups, respectively. The overhead assigned to each product is:

(a)Product A $8,000, Product B $8,000.
(b)Product A $8,000, Product B $6,000.
(c)Product A $6,000, Product B $6,000.
(d)Product A $6,000, Product B $8,000.

Answer 1

The overhead assigned to Product A and Product B are calculated by multiplying the number of setups for each product by the overhead rate of $100 per setup, resulting in $8,000 for Product A and $6,000 for Product B.

Step-by-step explanation:

The question relates to calculating the overhead assigned to each product based on the number of setups and the cost per setup. With the overhead rate given as $100 per setup, we can simply multiply this rate by the number of setups for each product to determine the overhead cost assigned to them.

For Product A with 80 setups:

• 80 setups × $100 per setup = $8,000

For Product B with 60 setups:

• 60 setups × $100 per setup = $6,000

Therefore, the overhead assigned to Product A is $8,000, and to Product B is $6,000. The correct answer is option (b).