Answer:
The correct answer is C.
Explanation:
Giving the following information:
Assume that the total costs assigned to the setup activity cost pool in March are $120,000 and 100 setups were completed in March.
Further, assume that during March machines were setup 20 times to make product X5.
First, we need to calculate the activity rate for setups.
To calculate the estimated manufacturing overhead rate we need to use the following formula:
Estimated manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base
Estimated manufacturing overhead rate= 120,000/100= $1,200 per setup
Now, we can allocate overhead:
Allocated MOH= Estimated manufacturing overhead rate* Actual amount of allocation base
Allocated MOH= 1,200*20= $24,000
