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Danato, Inc., applies manufacturing overhead to production using an activity-based costing system. The company's utilities cost pool has accumulated $180,000, its maintenance cost pool has
Danato, Inc., applies manufacturing overhead to production using an activity-based costing system. The company's utilities cost pool has accumulated $180,000, its maintenance cost pool has accumulated $240,000, and its set-up cost pool has accumulated $60,000. The company has two product lines, Deluxe and Basic. The utilities cost pool is allocated to these product lines on the basis of machine-hours. The maintenance pool is allocated on the basis of work orders. The set-up pool is allocated on the basis of production runs. a. Allocate the utilities cost pool to each product line assuming the Deluxe model used 6, 400 machine-hours and the Basic model used 1, 600 machine-hours. b. Allocate the maintenance pool to each product line assuming the Deluxe model required 50 work orders and the Basic model required 150 work orders. c. Allocate the set-up pool to each product line assuming the Deluxe model required 30 production runs and the Basic model required 70 production runs
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