Question

Lynwood, Inc. produces two different products (Product A and Product X) using two different activities: Machining, which uses machine hours as an activity driver, and Inspection, which uses number of batches as an activity driver. The activity rate for Machining is $180 per machine hour, and the activity rate for Inspection is $540 per batch. Usage of the activity drivers are as follows:

Product A Product X Total
Machine hours 1,400 3,100 4,500
Number of batches 47 18 65
What is the amount of Machining cost assigned to Product X?
a. $558,000
b. $756,000
c. $25,380
d. $252,000

Answer 1

a. $558,000

Step-by-step explanation:

The computation of the machine cost assigned to product X is given below:

= Machine hours × Activity rate per machine hour

= 3,100 × $180

= $558,000

By multiplying the machine hours with the activity rate per machine hour we can get the amount of machining cost that assigned to product X

hence the correct option is a.