Question

Assume that total costs assigned to the setup activity cost pool in June are $60,000 and 50 setups were completed in June. Further, assume that during June machines were setup 12 times to make product G10. The total setup cost that would be assigned to product G10 would be:

Answer 1

Answer:

Allocated cost= $14,400

Explanation:

First, we need to calculate the allocation rate for setup:

Cost allocation rate= total estimated costs for the period/ total amount of allocation base

Cost allocation rate= 60,000 / 50

Cost allocation rate= $1,200 per setup

Now, we can allocate setup cost to G10:

Allocated cost= 1,200*12

Allocated cost= $14,400