One of Merrick Textiles' activity cost pools is quality inspection, with an estimated overhead of $120,000. Merrick produces silk fabrics (800 inspections) and cotton fabrics (1,200 inspections). How much of the inspection cost pool should be assigned to silk fabrics?

One of Merrick Textiles' activity cost pools is quality inspection, with an estimated overhead of $120,000. Merrick produces silk fabrics (800 inspections) and cotton fabrics (1,200 inspections). How much of the inspection cost pool should be assigned to silk fabrics?

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter3: Cost Behavior

Section: Chapter Questions

Problem 33P: Big Mikes, a large hardware store, has gathered data on its overhead activities and associated costs...

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Question

How much of the inspection cost pool should be assigned to silk fabrics?

One of Merrick Textiles' activity cost pools is quality
inspection, with an estimated overhead of $120,000.
Merrick produces silk fabrics (800 inspections) and
cotton fabrics (1,200 inspections).
How much of the inspection cost pool should be
assigned to silk fabrics?

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