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 $200 per machine hour, and the activity rate for Inspection is $500 per batch. The activity drivers are used as follows: Product A Product X Total Machine hours 1,900 3,900 5,800 Number of batches 45 22 67 What is the amount of Machining cost assigned to Product A? Multiple Choice $22,500 $950,000 $380,000 $780,000

Question

Business

Mark Marsh

9 March, 09:39

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 $200 per machine hour, and the activity rate for Inspection is $500 per batch. The activity drivers are used as follows: Product A Product X Total Machine hours 1,900 3,900 5,800 Number of batches 45 22 67 What is the amount of Machining cost assigned to Product A? Multiple Choice $22,500 $950,000 $380,000 $780,000

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Answers (1)

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Kaitlin Carney · Answer 1

Machining cost assigned to Product A $380,000

Explanation:

Lynwood, Inc.

Activity Activity Driver Rate

Machining, per hour $200 per machine hour

Inspection, number of batches, $500 per batch

This is the consumption per product.

Product A Product X Total

Machine hours 1,900 3,900 5,800

Number of batches 45 22 67

We multiply the rate of machining with the no of hours for Product A to get the Machining cost assigned to Product A.

Machining cost assigned to Product A = Rate * No of Hours

Machining cost assigned to Product A = $ 200 * 1900 = $ 380,000