Tandem Company Manufactures Two Products (D and F) Using Functional-Based Costing, What Is the Amount of Overhead Cost

question 31

Multiple Choice

Tandem Company manufactures two products (D and F) . The overhead costs ($84,000) have been divided into three cost pools that use the following activity drivers: $\begin{array}{cccc}\text { Product } & \text { Number of Setups} & \text { Machine Hours} & \text { Packing Orders }\\\hline\mathrm{D} & 10 & 500 & 75 \\\text { F } & 10 & 2,000 & 175 \\\text { Cost perpool } & \$ 11,000 & \$ 60,000 & \$ 18,750\end{array}$ Using functional-based costing, what is the amount of overhead cost to be assigned to Product D using machine hours as the allocation base?

• A)$12,000
• B)$60,000
• C)$48,000
• D)$16,800

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Definitions:

Volume Increases

An upward trend in the quantity of goods or services sold, which can impact revenue and profitability.

Costs Per Unit

The total expense incurred in the production of a single unit of a product, including both fixed and variable costs.

Fixed Cost Per Unit

The cost that remains constant in total but varies inversely with the level of production or sales volume.

Variable Cost

Costs that vary in direct relation to a business's operations, like expenses for raw materials or manufacturing supplies.