Question
Lynwood, Inc. produces two different products (Product A and Product X) using two different activities: Machining, which uses machine hours as an activity driver,
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 $125 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 1,000 3,000 4,000 Number of batches 45 15 60 What is the amount of Machining cost assigned to Product A? A) $375,000 B) $500,000 C) $7,500 D) $125,000
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