355

Monthly indirect production costs are $400,000. The cost-allocation base for indirect costs is machine hours. The budgeted capacity for the month is 40,000 machine hours. Product X used 5,000 machine hours, Product Y used 15,000 machine hours and Product Z used 20,000 machine hours. How much of the indirect costs are allocated to Products X and Y?

Select one:

a. $5,000 to X; $15,000 to Y

b. None of the options is correct

c. $2,500 to X; $7,500 to Y

d. $50,000 to X; $150,000 to Y